Virtual General Counsel LLC
Virtual General Counsel LLC

Helping Startups And Complex Business Clients
Services Throughout Denver And The Surrounding Areas

PHONE: 303-395-0259
TOLL FREE: 800-229-1646

Are non-compete agreements legal in Colorado?

| Feb 6, 2018 | Contracts |

A non-compete agreement is a contract where an employee agrees that, if the employee leaves their job, they will not work in the same occupation for a different employer (usually a competitor) for a certain period of time. These agreements help employers protect their interests from competitors. However, are such agreements allowed under Colorado law?

Under Colorado Statutes, Section 8-2-113, it is against the law to try to force, threaten or intimidate an individual from pursuing a lawful occupation, wherever he or she chooses to do so. Therefore, per Colorado law, a non-compete agreement that restricts an individual’s right to work for and be paid by another employer is void, with four exceptions.

First, the above subsection is not applicable to contracts involving purchasing or selling a business or business assets. It is also not applicable to contracts that protect trade secrets. It is not applicable to contracts regarding the recovery of the expense the employer incurred in educating and training the worker when the worker worked for the employer for under two years. Finally, the above subsection is not applicable to executive and management workers and officers, and the professional staff of executives and managers. There are also certain exceptions with regards to non-competes involving physicians.

So, while at first glance it may seem like all non-compete agreements are void per Colorado, this is not true. While in general such contracts are against the law, there are important exceptions that apply. Therefore, it is possible for an employer to protect its interests, while still not impeding on an employee’s right to work.