On August 10, 2022, a revision to the Colorado statute governing non-compete agreements, and similar limitations on workers, went into effect. These statutory changes have far-reaching implications for businesses and their workers. If you or those you know own a business, it is important for the business to protect itself from insider theft of confidential information, clients, or personnel. It is crucial to ensure that current agreements and procedures are in place in compliance with the new law.
Under the new statute, getting these agreements wrong could place owners at risk of misdemeanor criminal charges, and civil penalties.
What does the new law govern?
The new law completely overhauls the (already restrictive) Colorado statute regarding use of non-compete agreements. In addition, it adds requirements and restrictions for businesses that wish to have its workers sign non-solicit and confidentiality agreements, among others.
These types of agreements are important for small businesses that wish to: keep workers from working for or starting competing businesses, keep workers from stealing clients and customers away to competing businesses, recover the costs of training and special education for workers, or keep confidential information and procedures secret.
The new law contains many exceptions and specific requirements, so each case is unique and requires individual review. However, as a general statement, the law:
–Applies to all workers, including employees and independent contractors
–Makes it illegal to request a worker to sign an agreement that does not comply with the statute
–Makes it illegal to attempt to enforce an agreement that does not comply with the statute, even if the agreement was legal when entered.
–Voids all covenants not to compete, unless the worker is highly compensated (compensation level will change each year).
–Voids all covenants not to solicit customers unless the worker is highly compensated (which compensation level will change each year).
–Limits how employers can “rake back” extraordinary training or educational expenses.
–Limits what can be subject to a confidentiality agreement
In addition, even if the agreement is not automatically void, it will be considered void if the business does not obtain specific, signed, documentation from the worker.
Out of state businesses that use Colorado-based workers will not be able to avoid this new statute by simply stating that a different states’ laws will apply to the agreement.
Artbiz.life Legal Counsel is currently offering a special $650 flat fee to create up to date agreements, notices, and policies for new or existing clients that are impacted by this law. To take advantage of this limited time offer, schedule a free consultation by emailing grusso@artbiz.life or via the contact form at www.artbiz.life. This offer expires April 30, 2023. Workers are also encouraged to contact our offices if you are requested to sign an agreement containing these types of clauses, or if someone threatens to enforce similar clauses.
Creative Legal, LLC 