Non-Disparagement Clauses in Colorado: New Rules Under the POWR Act
Colorado enacted significant restrictions on non-disparagement clauses with the Protecting Opportunities and Workers' Rights (POWR) Act, effective August 7, 2023. These changes substantially limit how employers can use these provisions.
Colorado's POWR Act
The POWR Act (HB 23-1076) amended the Colorado Anti-Discrimination Act and directly addresses non-disparagement and nondisclosure clauses in employment agreements. Key provisions include:
- Employers cannot require employees to sign agreements that prevent disclosure of unfair or discriminatory employment practices, unless the employee requests the non-disparagement provision as part of the resolution.
- If a non-disparagement provision is included at the employee's request, the agreement must include a disclaimer that the provision does not prevent the employee from disclosing the underlying facts to the Colorado Civil Rights Division (CCRD), the EEOC, or other governmental agencies.
- Employers who include non-compliant provisions face a separate and actionable unfair employment practice claim.
Beyond the POWR Act
For non-disparagement clauses outside the employment discrimination context, Colorado courts apply general contract principles. Colorado Revised Statutes do not separately restrict commercial non-disparagement clauses, which remain enforceable when they are reasonable and supported by consideration.
Enforceability Factors
- POWR Act compliance: Employment-related non-disparagement clauses must comply with the POWR Act's specific requirements, including employee-initiated provisions and required disclaimers.
- Consideration: Standard contract consideration requirements apply. Severance payments, bonuses, and other tangible benefits support enforceability.
- Scope: Even where permitted, clauses must be reasonably related to protecting legitimate interests.
Red Flags in Colorado
- Employer-imposed non-disparagement clauses that restrict discussion of workplace discrimination or harassment
- Missing disclaimers about retained rights to communicate with CCRD, EEOC, and other agencies
- Non-disparagement provisions in agreements that do not reflect the employee's own request
- Clauses that broadly define disparagement to include truthful descriptions of workplace conditions
When to Consult a Lawyer
The POWR Act creates specific requirements and potential liability for non-compliant agreements. If you are signing an employment, severance, or settlement agreement in Colorado with a non-disparagement clause, consider consulting a Colorado employment attorney to ensure the clause complies with current law.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.