Colorado passed House Bill 22-1317, effective August 10, 2022, dramatically restricting non-compete agreements. For most employees, non-competes are now void. Only workers earning above a high salary threshold in roles involving access to trade secrets can be subject to a non-compete — and even then, strict procedural requirements apply.
What is a Enforceability?
Under Colorado HB 22-1317 (C.R.S. 8-2-113), non-compete clauses are void unless the employee earns above the annual threshold (adjusted each year; approximately $123,750 in 2023) AND the restriction is for the protection of trade secrets. Non-solicitation of employees or customers has a lower threshold (approximately $74,250 in 2023) but still requires trade secret justification. Agreements must be provided at least 14 days before the start of employment or the effective date. Violations carry criminal penalties.
Red flags to watch for
Colorado voids non-competes for employees below the annually adjusted threshold. In 2023 this is approximately $123,750. The clause is unenforceable regardless of the contract language.
Colorado requires that the restriction be justified by protecting trade secrets. A general non-compete without a trade-secret basis fails the statutory test.
Colorado requires the employer to provide the non-compete at least 14 days before the employee starts work or before the agreement takes effect. Last-minute signing voids the restriction.
Colorado law makes it a class 2 misdemeanor for an employer to present an unenforceable non-compete. However, employees sometimes see inflated breach consequences in contracts. Understand the actual legal consequences.
Colorado courts will generally apply Colorado law to Colorado employees regardless of a choice of law clause. An employer selecting Texas or Georgia law cannot import more permissive non-compete rules.
Your legal rights
Under C.R.S. 8-2-113, presenting or entering into an unenforceable non-compete is a class 2 misdemeanor criminal offense in Colorado. Employees who sign void non-competes are not legally bound by them. You can seek declaratory relief, and courts may award attorney fees. The 14-day advance notice requirement and salary thresholds are strictly enforced with no exceptions for senior employees who were unaware of the law.
Questions to ask before you sign
- 1Does my compensation exceed the current Colorado salary threshold for non-competes?
- 2Does the non-compete specifically relate to protecting trade secrets I will access?
- 3Was I provided the agreement at least 14 days before my start date or the effective date?
- 4Does the contract claim to apply another state's law to evade Colorado restrictions?
- 5Are there non-solicitation clauses, and does my compensation exceed that separate threshold?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.