Are Non-Compete Agreements Enforceable in Colorado?
Non-compete agreements are used to attempt to restrict a company’s employees, members, executives, independent contractors, customers and vendors from engaging in competitive activities with that company. C.R.S. Section 8-2-113, states that it is unlawful to use threats, force or any other means of intimidation to prevent a person from engaging in any lawful occupation. It also states that “any covenant not to compete which restricts the right of any personal to receive compensation for performance of skilled or unskilled labor for any employer shall be void.” What does that mean? Well, the general rule is that non-competes are not allowed in Colorado, unless the situation falls into an exception. The exceptions are:
- Is the non-compete being used to protect trade secrets
- to protect the purchaser in connection with the sale of a business and/or the business’ assets
- to recover the expense of education or training an employee of less than two-year duration
- to restrict executive and management personnel or professional staff to those personnel
- The duration of the restriction
- The geographic scope of the restriction
- Whether the Agreement is overly restrictive.
- Largely limit the use of non-competes to situations where there’s a sale of a business or dissolution of a partnership.
- Authorize the U.S. Department of Labor to take steps to educate the public about the limitations surrounding the use of non-compete clauses.
- Give workers a private right of action to sue for violations of the WMA.