Are Non-Compete Agreements Enforceable in Colorado?

Posted in non compete agreements by Nick Hansen on October 26th, 2016

Non-compete agreements are used to attempt to restrict a company’s employees, independent contractors, customers and vendors from engaging in competitive activities with that company. But, many people wonder “Are non compete agreements enforceable?”  For example, an employee with in-depth knowledge of a particular business or industry may be restricted from sharing their knowledge with competitors.

In the State of Colorado, non-compete agreements generally are not allowed, unless they fall under one of the following four exceptions:

  • They are used to protect trade secrets
  • They are used to protect the purchaser in connection with the sale of a business and/or its assets
  • They are used to recover the expense of education or training an employee of less than two-year duration
  • They are used to restrict executive and management personnel or professional staff to those personnel

Non-compete agreements that do not fall under one of these exceptions generally cannot be enforced in Colorado.

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Unfortunately, the statutes and case law governing non-compete agreements in Colorado are vague at best.  C.R.S. Section 8-2-113, boldly states that it is unlawful to use threats, force or any other means of intimidation to prevent a person from engaging in any lawful occupation.   It also states that “any covenant not to compete which restricts the right of any personal to receive compensation for performance of skilled or unskilled labor for any employer shall be void.”

However, Colorado’s bold pronouncement within C.R.S. Section 8-2-113 against the enforce-ability of non-compete agreements is misleading.  The pronouncement is of absolutely no effect if it can be successfully argued that the non-compete agreement in question falls into one or more of the four exceptions noted above.

Simply put, while C.R.S. Section 8-2-113 touches on the issue of non-compete agreements and their legality in Colorado, it does not, unfortunately, provide sufficient detail and explanation to guide those who may be subject to such agreements.  For example, the law leaves it up to the courts to determine who qualifies as “executive and management personnel” and what restrictions, if any, are necessary to protect any purported trade secrets.

Reasonable Non Compete Agreements

Even if a business is able to establish that its non-compete agreement is allowed under the law, the business must still prove that the restrictions imposed by the agreement are reasonable.  Among other things, to determine whether the restrictions are reasonable, the court will examine the:

  • Geographic scope of the restriction
  • Duration of the restriction
  • Whether the agreement is overly restrictive

Negotiating Non Compete Agreements in Colorado

The best way to restrict the enforce-ability of a non-competition agreement is to seek qualified legal counsel like Hansen Law Firm in helping to narrow the scope of the agreement before it is signed.  Unfortunately, many employees and independent contractors simply sign such agreements without thinking about how damaging such non-compete agreements can be on their long term career goals.  Spending money hiring legal counsel to assist in the negotiation of a non-compete agreement is money well spent if one considers the long term impact that a broad non-compete agreement can have on your career, including your ability to switch employers, start your own business and be paid what you are worth. If you’ve already asked the question “Are Non Compete Agreements Enforceable” and you’ve decided that yours isn’t, we can help. Or if you still don’t know the answer, we can help decide that too. As a trusted Denver employment lawyer, you will be in good hands to get the contract you deserve.

Help Fighting Non Compete Agreements in Colorado

If you have already signed a non-compete agreement, it makes sense to seek qualified legal counsel like Hansen Law Firm to assist you in understanding your rights and responsibilities under the agreement.  It would be tragic to simply assume that you are subject to the restrictions of a non-compete agreement when a skilled legal professional could review your agreement and tell you otherwise.

At Hansen Law Firm, we can help you navigate the vagueness and complexity of the law regarding non-compete agreements. If you still have more questions about your specific agreement and are non compete agreements enforceable, call us. We’re experts on all things related to non-compete agreements and their legality and enforceability within the State of Colorado. To schedule a free consultation, please call 303-785-7777.

 

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