Employee Non-Compete Agreement and Enforceability Memo — Colorado

COLORADO Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

TO: [Hiring Manager / General Counsel / Client]
FROM: [Attorney Name], [Firm]
RE: Enforceability of Proposed Non-Compete Restriction Against [Employee Name] Under Colorado Law
DATE: [__/__/____]

1. Executive Summary

Colorado's restrictive-covenant regime is among the most worker-protective in the nation. C.R.S. § 8-2-113 declares most post-employment non-competes void and imposes substantial civil and criminal penalties on employers who use prohibited covenants. Before drafting or enforcing a non-compete in Colorado, the employer must confirm that:

(a) The covenant falls within one of the six statutory exceptions in § 8-2-113(2);
(b) The worker's annualized cash compensation meets the applicable CDLE threshold both at the time the covenant is entered AND at the time of enforcement;
(c) The covenant is no broader than reasonably necessary to protect the employer's legitimate interest in trade secrets;
(d) The mandatory separate-document, pre-acceptance notice has been delivered in the prescribed form and timing; and
(e) The covenant honors the mandatory Colorado choice-of-law and venue rule under § 8-2-113(6).

2. Default Rule: Void

Under § 8-2-113(2)(a), any covenant that "restricts the right of any person to receive compensation for performance of labor for any employer" is void, unless one of the limited exceptions applies. The Colorado General Assembly preserved pre-August 10, 2022 case law defining what constitutes a "covenant not to compete" (§ 8-2-113(1)).

3. Statutory Exceptions

4. Notice Requirements (§ 8-2-113(4))

Failure to comply with any of these notice requirements voids the covenant.

• New Hires: Notice and a copy of the covenant must be provided before the worker accepts the offer of employment.
• Existing Employees: Notice must be provided at least 14 days before the earlier of (a) the effective date of the covenant or (b) the date additional consideration is provided.
• Form: Notice must be in a separate document delivered with or accompanying the agreement.
• Content: Must (i) identify the covenant by name; (ii) state that the agreement contains a covenant that could restrict the worker's options for subsequent employment following separation; and (iii) direct the worker to the specific sections or paragraphs containing the non-compete provisions.
• Clarity: Must be "clear and conspicuous" and signed/acknowledged by the worker.

5. Choice of Law and Venue (§ 8-2-113(6))

For workers who primarily reside or work in Colorado at the time of termination:

• Colorado law governs the enforceability of the covenant, regardless of contractual choice-of-law clauses;
• Disputes must be adjudicated in Colorado; out-of-state forum-selection clauses are unenforceable.

Attempts to evade Colorado law through choice-of-law clauses are themselves treated as a § 8-2-113 violation.

6. Penalties for Non-Compliance

• Civil — § 8-2-113(8): Actual damages, a $5,000 statutory penalty per worker subjected to a void covenant, attorney fees, and costs.
• Criminal — § 8-2-113(1.5) & § 18-1.3-501: Class 2 misdemeanor for using force, threats, or other means of intimidation to prevent a person from engaging in a lawful occupation (e.g., threatening to sue under a void non-compete).
• CDLE / AG Enforcement: Both the Colorado Division of Labor Standards and Statistics and the Colorado Attorney General may investigate and bring enforcement actions.

7. Healthcare Provider Carve-Out (SB 25-083, eff. Aug. 6, 2025)

Non-competes restricting the following are unenforceable against a healthcare provider regardless of income:

(a) The provider's continuing practice of medicine;
(b) Communication of the provider's new professional contact information; or
(c) The patient's right to choose a healthcare provider.

8. Recommended Approach for This Engagement

Based on the facts as presented (☐ confirm worker compensation; ☐ confirm trade-secret interest; ☐ confirm worker primarily resides/works in CO):

☐ Pursue HCE non-compete under § 8-2-113(2)(b) — confirm $130,014/yr threshold; deliver compliant notice; narrow to trade-secret protection.

☐ Pursue customer non-solicit under § 8-2-113(2)(d) — confirm $78,008.40/yr threshold; deliver compliant notice.

☐ Abandon non-compete and rely on the Alternative Protections Package in Part B (NDA + trade-secret + narrow non-solicit-of-trade-secrets) — recommended where worker is below threshold or trade-secret interest is weak.

☐ Sale-of-business non-compete — different rules; consult § 8-2-113(2)(c) and sale documents.

Part B — Cannot Be Enforced: Alternative Protections Package

WHY THIS SECTION REPLACES A STANDARD NON-COMPETE: Because Colorado bans most post-employment non-competes under C.R.S. § 8-2-113(2)(a), and because using a void non-compete exposes the employer to a $5,000-per-worker civil penalty plus criminal liability, this template provides an Alternative Protections Package consisting of (1) a Confidentiality / NDA Agreement, (2) a Trade-Secret Protection Acknowledgment, and (3) a narrow Non-Solicitation-of-Trade-Secret-Protected-Customers covenant compliant with § 8-2-113(2)(d). Use this package in lieu of a non-compete unless (a) the worker meets the HCE threshold AND (b) the employer can articulate a specific trade-secret interest. Even then, the HCE non-compete must be drafted as narrowly as possible and accompanied by the mandatory pre-acceptance separate-document notice (see Exhibit A).

B-1. Confidentiality and Non-Disclosure Agreement

THIS CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT ("Agreement") is entered into as of [__/__/____] by and between [EMPLOYER NAME] ("Company") and [EMPLOYEE NAME] ("Employee").

1. Definition of Confidential Information. "Confidential Information" means any non-public, proprietary, or trade-secret information of the Company, including but not limited to: customer lists, pricing strategies, business plans, financial data, product development plans, marketing strategies, vendor terms, software, algorithms, technical data, and employee information. This definition is intended to be consistent with the Defend Trade Secrets Act, 18 U.S.C. § 1836, and the Colorado Uniform Trade Secrets Act, C.R.S. § 7-74-101 et seq.

2. Statutory Carve-Outs (C.R.S. § 8-2-113(3)). Notwithstanding anything to the contrary, this Agreement does NOT prohibit Employee from disclosing or using:

(a) Information that arises from Employee's general training, knowledge, skill, or experience, whether gained on the job or otherwise;
(b) Information that is readily ascertainable to the public; or
(c) Information that Employee otherwise has a right to disclose as legally protected conduct (including, without limitation, reporting suspected violations of law to government agencies, participating in government investigations, or engaging in concerted activity protected by the NLRA).

3. DTSA Whistleblower Notice (18 U.S.C. § 1833(b)). An individual shall not be held criminally or civilly liable under any federal or state trade-secret law for the disclosure of a trade secret that (a) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

4. Use Restrictions. Employee shall use Confidential Information only in the course of performing Employee's duties for the Company, and shall not disclose Confidential Information to any third party except as expressly authorized in writing by the Company.

5. Return of Materials. Upon termination of employment, Employee shall promptly return or destroy all Confidential Information in Employee's possession, including electronic copies.

6. Survival. Employee's obligations under this Section B-1 survive termination of employment for so long as the information remains a trade secret or remains confidential and proprietary to the Company.

B-2. Trade-Secret Protection Acknowledgment

Employee acknowledges that, in the course of Employee's employment, Employee will have access to Company trade secrets, including (without limitation): [________________________________] [describe with specificity — e.g., customer pricing algorithms; proprietary manufacturing processes; customer-specific deal terms]. Employee further acknowledges that misappropriation of these trade secrets would cause irreparable harm to the Company, and that the Company shall be entitled to injunctive relief and damages (including exemplary damages and attorney fees where authorized by C.R.S. § 7-74-104 and § 7-74-105) for any such misappropriation.

B-3. Narrow Non-Solicitation-of-Trade-Secret-Protected Customers (Conditional — § 8-2-113(2)(d))

CONDITIONAL — INCLUDE ONLY IF EMPLOYEE EARNS AT LEAST $78,008.40/YR (2026 figure; verify current CDLE PAY CALC).

For a period of twelve (12) months following termination of employment (or the shortest period permissible under Colorado law), Employee shall not, directly or indirectly, solicit business from any Customer of the Company with respect to which Employee had access to Company trade-secret information during the final twelve (12) months of Employee's employment, where such solicitation would require Employee to use or disclose such trade-secret information. This restriction is intended to be no broader than reasonably necessary to protect the Company's legitimate interest in protecting its trade secrets, as required by C.R.S. § 8-2-113(2)(d).

"Customer" means a person or entity that purchased goods or services from the Company during the twelve (12) months preceding Employee's termination and as to which Employee had material contact or access to trade-secret information.

B-4. Conditional HCE Non-Compete (§ 8-2-113(2)(b))

CONDITIONAL — INCLUDE ONLY IF (a) EMPLOYEE EARNS AT LEAST $130,014/YR (2026; verify current CDLE PAY CALC) BOTH AT SIGNING AND AT ENFORCEMENT; (b) EMPLOYER HAS A SPECIFIC TRADE-SECRET INTEREST; AND (c) MANDATORY SEPARATE-DOCUMENT PRE-ACCEPTANCE NOTICE HAS BEEN DELIVERED (SEE EXHIBIT A).

For a period of twelve (12) months following termination of employment, Employee shall not, directly or indirectly, engage in any business activity within [specified narrow geographic area and activity scope] that would necessarily involve the use or disclosure of the Company's trade-secret information identified in Section B-2 above. This covenant is expressly limited to what is reasonably necessary to protect the Company's legitimate interest in protecting trade secrets, as required by C.R.S. § 8-2-113(2)(b).

DRAFTER'S NOTE: Even with HCE compliance, courts construe § 8-2-113(2)(b) strictly. The covenant must (1) be tied to a specific identified trade secret, (2) have a narrowly drawn geographic and activity scope, and (3) have a duration no longer than reasonably necessary. Avoid generic "business of the Company" language; tie restrictions to specific identified trade-secret categories.

B-5. Healthcare Provider Disclaimer (If Applicable — SB 25-083)

If Employee is a healthcare provider, nothing in this Agreement shall restrict (a) Employee's continuing practice of medicine; (b) Employee's communication of Employee's new professional contact information; or (c) any patient's right to choose a healthcare provider.

B-6. Remedies and Enforcement

Injunctive Relief. Employee acknowledges that a breach of Sections B-1 through B-4 would cause irreparable harm and that the Company shall be entitled to injunctive relief, in addition to monetary damages and other remedies at law or equity.

Attorney Fees. The prevailing party in any action to enforce this Agreement shall be entitled to recover reasonable attorney fees and costs, subject to C.R.S. § 8-2-113(8) (which provides that workers prevailing on a claim that the covenant is void may recover attorney fees against the employer).

Choice of Law and Venue (C.R.S. § 8-2-113(6)). This Agreement shall be governed by Colorado law, and any dispute arising under this Agreement involving an employee who primarily resides or works in Colorado at the time of termination shall be adjudicated exclusively in the state or federal courts located in [____________] County, Colorado.

Severability. If any provision of this Agreement is held void or unenforceable, the remaining provisions shall continue in full force and effect; provided, however, that the Company shall not seek to enforce, and shall withdraw upon notice, any provision that violates C.R.S. § 8-2-113.

Part C — Pre-Signing Checklist

Complete this checklist BEFORE the employee signs. Failure on any item exposes the employer to a $5,000 statutory penalty per worker plus attorney fees, and possibly criminal liability.

Threshold Confirmation

☐ Confirmed worker's annualized cash compensation (base + commissions + non-discretionary bonus) meets the applicable CDLE threshold for the relevant covenant type.
☐ Confirmed CDLE PAY CALC Order figure for current year ($130,014 / $78,008.40 for 2026; verify if drafted after Jan. 1 of new year).
☐ Documented that worker will continue to meet the threshold throughout the restricted period (and understand that, if income falls below threshold at enforcement, the covenant becomes unenforceable).

Trade-Secret Interest

☐ Identified specific trade-secret category protected (not generic "confidential information").
☐ Confirmed that scope of restriction is "no broader than reasonably necessary" to protect that interest.
☐ Avoided generic geographic or activity-scope language; tied restrictions to specific trade-secret categories.

Notice Compliance

☐ Drafted notice in a separate document from the agreement itself.
☐ Notice identifies the covenant by name.
☐ Notice states the covenant "could restrict the worker's options for subsequent employment following separation from employer."
☐ Notice directs worker to the specific sections or paragraphs of the agreement containing the covenant.
☐ Notice is clear and conspicuous (bold heading; readable font; not buried).
☐ NEW HIRE: Notice delivered BEFORE worker accepted offer of employment.
☐ EXISTING EMPLOYEE: Notice delivered at least 14 days before earlier of (a) effective date or (b) date additional consideration provided.
☐ Worker signed/acknowledged the notice.

Document Integrity

☐ Agreement contains explicit C.R.S. § 8-2-113(3) carve-outs (general skills/knowledge; publicly available info; legally protected conduct).
☐ Agreement contains DTSA whistleblower notice (18 U.S.C. § 1833(b)).
☐ Choice-of-law clause specifies Colorado law.
☐ Forum-selection clause specifies Colorado venue.
☐ Healthcare provider carve-out included if applicable (SB 25-083).
☐ No tolling provision that violates Colorado public policy.

Recordkeeping

☐ Original signed agreement retained in employee file.
☐ Signed and dated notice retained separately (proof of pre-acceptance/14-day delivery).
☐ Documentation of compensation at signing (offer letter, payroll record).
☐ Documentation of trade-secret training and access controls.

Pre-Litigation Re-Check (Before Sending Demand Letter or Filing Suit)

☐ Worker still meets income threshold at the time of enforcement.
☐ Trade-secret interest is still cognizable.
☐ No criminal-penalty risk under § 8-2-113(1.5) (avoid threats; have counsel review demand letter).
☐ Confirmed worker primarily resided/worked in CO at time of termination → Colorado law and venue apply.
☐ Considered whether attorney-fee exposure under § 8-2-113(8) outweighs likely recovery.

Sources and References

• C.R.S. § 8-2-113 (Justia / FindLaw) — https://codes.findlaw.com/co/title-8-labor-and-industry/co-rev-st-sect-8-2-113/
• C.R.S. § 8-2-113 (LexisNexis / Colorado Revised Statutes) — https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-08.pdf
• SB 22-1317 (2022) — Restrictive Employment Agreements — https://leg.colorado.gov/bills/sb22-1317
• SB 25-083 (2025) — Limitations on Restrictive Employment Agreements (signed June 3, 2025; eff. Aug. 6, 2025) — https://leg.colorado.gov/bills/sb25-083
• 7 CCR 1103-14 — CDLE 2025 PAY CALC Order — https://cdle.colorado.gov/sites/cdle/files/adopted_2025_pay_calc_order_7_ccr_1103-14_11.7.24_accessible.pdf
• CDLE Division of Labor Standards and Statistics — https://cdle.colorado.gov/dlss
• Colorado Uniform Trade Secrets Act, C.R.S. § 7-74-101 et seq. — https://leg.colorado.gov/
• Defend Trade Secrets Act, 18 U.S.C. § 1836 — https://www.law.cornell.edu/uscode/text/18/1836
• DTSA Whistleblower Immunity, 18 U.S.C. § 1833(b) — https://www.law.cornell.edu/uscode/text/18/1833
• Greenberg Traurig, "2025 Round-Up: Major Colorado Employment Law Developments" (Dec. 2025) — https://www.gtlaw.com/en/insights/2025/12/2025-round-up-major-colorado-employment-law-developments
• Fairfield and Woods, "Salary Thresholds and Minimum Wage for 2025" — https://www.fwlaw.com/insights/salary-thresholds-and-minimum-wage-for-2025
• Seyfarth Shaw, "2026 State Noncompete Salary Threshold Changes" — https://www.tradesecretsandemployeemobility.com/raising-the-cost-of-noncompetes-2026-state-noncompete-salary-threshold-changes

This template is provided for informational purposes only and does not constitute legal advice. Colorado's non-compete regime is uniquely punitive: civil penalties, attorney-fee exposure, and criminal liability attach to non-compliance. Always verify the current CDLE-published HCE threshold (adjusted each January 1) before drafting or enforcing. Do not rely on this template without review by a Colorado-licensed employment attorney.

Prepared for use on ezel.ai — a legal template platform for solo and small-firm practitioners.