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Are non-compete agreements valid in Colorado?

On Behalf of | Dec 5, 2022 | Business Law News

When Colorado residents start a new job, there are often many different documents they need to review and sign as they become employees.  They may also be asked to sign a non-compete or non-solicitation agreement.

Non-compete and non-solicitation agreements are contracts designed to limit employees from quitting and going to a competitor of the business for their new job. The fear is the employee has specific knowledge of the company and if they go to a competitor they will disclose their knowledge or be able to take clients away from the old company.

These contracts can be very restrictive on workers, and they have been controversial throughout the nation. In Colorado they are not valid for many employees.

When non-compete and non-solicitation agreements are valid

Under Colorado law, non-compete agreements are only valid for employees who earn higher levels of income. Non-solicitation agreements are valid for more employees. Non-solicitation agreements are valid for any employee earning 60% of the income threshold for highly compensated employees for non-compete agreements.

While these two restrictive covenants do not apply to all employees, employers can still recover money spent on the education and training for any employee. However, the amount employers can recover decreases over the two years after the employer spent the money on the education and training. They can also recover money spent on scholarships for employees working in apprenticeships, if the employee violates the terms the agreement.

Many employees in Denver have valid non-compete agreements, but many others do not meet the requirements. Even if these employees sign a non-compete agreement, it cannot be enforced unless the employees are highly compensated.

Based on these various rules governing non-compete and non-solicitation agreements, it may be wise to have an experienced attorney review these documents prior to signing them.