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Virtual General Counsel LLC

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Are non-compete agreements lawful in Colorado?

| Sep 12, 2018 | Contracts |

When a person in Colorado starts a new job, it can be an exciting time. However, after being hired or during the course of employment, a worker may be faced with signing a non-compete agreement, stating that the worker will not work for a competing business if they leave the employment of their current employer. This can be very limiting on a worker, and for this reason, Colorado law has addressed the issue of non-compete agreements.

In general, per Colorado law, non-compete agreements are void. However, there are four exceptions to this blanket rule. It is important to know what these exceptions are, so one can understand the difference between lawful non-compete agreements and those that are not allowed.

First, non-compete clauses can be included in contracts for the purchase and sale of a business or business assets. Second, non-compete clauses can be included in agreements for the protection of a company’s trade secrets. Third, clauses providing for the recovery of costs of training and educating workers who have worked for the employer for fewer than two years are allowed. Finally, non-compete agreements are legal when they apply to executive and management employees, and employees who work as professional staff to executive and management employees. There are also specific rules when it comes to non-compete agreements and those who work as physicians in Colorado.

As this shows, while in general non-compete agreements are not permitted in Colorado, the exceptions to this rule could affect many workers. However, workers who are faced with a non-compete agreement may want to first consult with a legal professional before signing the contract. A legal professional can analyze the agreement to determine if it is lawful and if it is in their client’s best interests.