In 2022, Colorado overhauled a state law, C.R.S. § 8-2-113, sharply limiting post-employment restraints. Any agreement signed after Aug. 9, 2022, must protect trade secrets and involve a “highly compensated” worker. The wage threshold, adjusted each January, sits at $123,750 in 2025. Clauses that overreach in geography, duration or scope risk invalidation.
Denver judges usually ask three questions. The first issue is whether the employee’s earnings exceed Colorado’s statutory compensation floor. If not, the covenant fails outright. Second, is the restriction no broader than needed to shield trade secrets? A city-wide ban for a job that handled only client lists in one neighborhood rarely survives. Finally, does an exception apply? Sale-of-business deals, physician agreements with notice requirements and clauses securing repayment of bona-fide training costs receive different treatment.
The Federal twist: FTC’s 2024 Rule
On April 23, 2024, the Federal Trade Commission issued a final rule banning most post-hire non-competes nationwide. Existing Colorado covenants remain intact for highly compensated employees, but employers cannot demand new ones once the federal rule takes effect.
Several legal actions have already been lodged, most notably a well-publicized suit spearheaded by the U.S. Chamber of Commerce. Until those cases work through the courts, the rule’s compliance date hangs in limbo.
Conclusion
Agreements executed before Aug. 9, 2022, remain governed by prior Colorado law unless the FTC rule ultimately voids them. Covenants signed after Aug. 9, 2022, must meet wage, purpose and scope limits or face statutory penalties, including a $5,000 per worker fine. New non-competes may be off the table entirely once the FTC rule clears judicial review.
Employers should audit existing agreements and consider trade-secret policies that do not rely on restrictive covenants. Employees should confirm whether compensation meets the yearly threshold and whether duties truly involve proprietary information.
For statutory text, filing instructions and exemption figures, visit the Colorado Department of Labor and Employment. Watching both the state statute and the evolving federal rule is essential. The line between enforceable and void may shift again before the year ends.