Employers generally do not want their workers to leave for other jobs, especially to work for competitors. They spend time and money training their workers, and workers often have special knowledge of the employer’s activities and operations. For this reason, many employers used to require workers to sign non-compete agreements.
However, the laws on non-compete agreements have changed, as has public sentiment on the intrinsic fairness of such contracts. Non-compete agreements can unreasonably restrict a worker’s ability to seek employment where they see fit, to their detriment. Now, for the most part, non-competes are generally void in Colorado.
Traditional non-compete agreements
It used to be the case that Colorado law allowed employers to have executives and professional workers sign non-compete agreements either upon employment or when leaving the employer.
A non-compete agreement could prevent a worker from seeking employment with a competitor for a certain time period. A non-compete agreement could prohibit a worker leaving the employer to work for a competitor from taking other employees with them. Finally, a non-compete agreement could prohibit workers from divulging the employer’s trade secrets or other types of proprietary information to other employers.
However, non-compete agreements caused problems. Oftentimes they were too restrictive in time or geographic scope, making it too difficult for a worker to find appropriate employment elsewhere. They often benefited employers to the detriment of the worker. So, changes to the law were made.
The current state of non-compete agreements
Now under Colorado law, employers cannot force, threaten or in any other way prevent a worker from leaving their employment and working somewhere else. This generally means that non-compete agreements are not lawful in Colorado.
However, there are some exceptions where a limited non-compete agreement might be honored. “Highly compensated” workers might be subject to a non-compete agreement that is designed only to protect the employer’s trade secrets and is no broader than is reasonably necessary to protect these trade secrets.
So, workers in Colorado who are not “highly compensated” generally do not have to sign a non-compete agreement as a condition of employment or upon leaving the employer. While there are some very limited exceptions, non-compete agreements are generally void in Colorado and will usually not be enforced.