Non-Compete Clauses in Colorado: New Rules Since 2022
Colorado's Major 2022 Reform
Colorado enacted HB 22-1317 effective August 10, 2022, which dramatically changed non-compete enforceability. This law is one of the most employee-friendly in the country and makes most non-competes void unless they meet narrow exceptions.
Who Can Be Subject to a Non-Compete?
Under the new law, non-compete agreements are only enforceable for:
- Highly compensated workers earning at or above the threshold set annually by the Colorado Department of Labor and Employment (approximately $123,750 for 2024, adjusted annually)
- Workers with access to trade secrets, where the non-compete is necessary to protect those specific trade secrets
For everyone else, non-compete clauses are void and unenforceable as a matter of law.
Additional Requirements
Even for eligible workers, a non-compete must:
- Be no broader than necessary to protect the employer's legitimate interest in trade secrets
- Be reasonable in time, geography, and scope
- Include a clear notice to the worker that the non-compete is part of the agreement
- Be provided to the worker before the start of employment or at least 14 days before the effective date of the non-compete
Penalties for Non-Compliant Non-Competes
Employers who attempt to enforce a non-compete that violates the statute face significant consequences:
- The employee can recover actual damages or $5,000, whichever is greater
- Reasonable attorney fees and costs
- The agreement is void as a penalty
Non-Solicitation Clauses
Customer non-solicitation agreements are treated separately but also restricted. They are enforceable only for workers earning above a lower threshold (approximately $61,875 for 2024) and must meet the same notice requirements.
Red Flags in Colorado Non-Competes
- No notice provided at least 14 days before the effective date
- Applied to workers below the income threshold
- No connection to specific trade secrets
- Overly broad definition of competing activities
- Signed after 2022 without complying with HB 22-1317 requirements
When to Consult a Lawyer
Consider consulting a Colorado employment attorney if you signed a non-compete before or after 2022, as the legal landscape has changed significantly. If your employer is attempting to enforce a non-compete and you earn below the threshold, the clause may be void and you may be entitled to damages.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.