The most common question about non-compete agreements is probably this: Are they legal? In short, yes, they are, but there limitations. Many states have been restricting the applicability and favorability of these agreements in the eyes of the law in recent years, and Colorado is included in that movement. The Federal Trade Commission is also currently working on new rules that may limit the use of these agreements nationwide.
Non-compete basics
So, what should you know about non-compete agreements? Well, for starters, it is important to understand the underlying concept of these agreements. Why would an employer want an employee to sign this type of agreement? In essence, it is to make sure that employees don’t leave the employer and then immediately and directly compete in the same area of influence of the employer. And, by area of influence, that means both geographically and in the area of the specific work, like technology or medical fields, for example. Oftentimes, employers try to make these agreements applicable for a certain amount of time.
Some people may be so excited about a new employment opportunity that they don’t pay much attention to these non-compete agreements or clauses. But, if you do that, you may be making a mistake now that will impact you years down the road. Non-compete clauses and agreements may be legal, but that doesn’t mean that you just have to accept them.
Anyone in Colorado who has been offered an employment contract or an agreement that in any way restricts their employment opportunities in the future should be sure to carefully review those documents. Non-compete clauses and agreements must be reasonable to be enforceable.