C.R.S. § 8-2-113: Colorado Non-Compete Thresholds and Exemptions

Under Colorado non-compete law, most non-compete agreements are void by default. Since August 10, 2022, an employer can only enforce a non-compete against a worker who earns above an annually adjusted salary threshold, received proper written notice in advance, and whose restriction is no broader than necessary to protect a genuine trade secret. Healthcare providers are exempt entirely as of August 6, 2025. Employers who violate the statute face a $5,000 penalty per worker, actual damages, attorney fees, and potential criminal liability.¹

Which Agreements the Current Rules Apply To

C.R.S. § 8-2-113 in its current form governs every non-compete or non-solicitation agreement signed or renewed after August 10, 2022. Agreements signed before that date are judged under prior Colorado case law, which the statute preserves.¹ If your employer asks you to sign an updated contract or handbook containing restrictive language, that renewal pulls the agreement under the current requirements even if your original contract predates them.

The statute protects anyone who primarily lives or works in Colorado when their employment ends, no matter where the employer is based or where the contract was executed. Choice-of-law clauses pointing to another state’s law, and forum-selection clauses requiring litigation outside Colorado, cannot be used to sidestep the statute.¹

Salary Threshold for a Full Non-Compete

A non-compete is only enforceable against a “highly compensated” worker. The Colorado Division of Labor Standards and Statistics adjusts the threshold each January. For 2026, the number is $130,014 in annualized cash compensation.² If a worker earns even slightly less, the non-compete is void.

“Annualized cash compensation” is gross salary, wages, fees, or other regular compensation projected across a full year. For a worker employed less than a year, the calculation uses the established rate.¹ Employers sometimes try to fold one-time bonuses, equity grants, or insurance premiums into the number to push a worker over the line. The statute’s language does not support that.

The threshold has to be met twice: when the agreement is signed and when the employer tries to enforce it. Because the number resets each January, an agreement valid at signing can become unenforceable if a worker’s pay drops below the current threshold.

Salary is a floor, not the whole test. The non-compete must also protect a trade secret and be no broader than reasonably necessary to serve that purpose.¹ The geographic reach and time period have to be proportional to the interest being protected.

Lower Threshold for Customer Non-Solicitation

Agreements that restrict a departing worker from soliciting an employer’s existing customers use a lower salary floor: 60 percent of the highly compensated threshold. For 2026, that comes to $78,008.40 in annualized cash compensation.² Below that, any customer non-solicitation clause is void from the start.

A non-solicitation agreement also has to be no broader than reasonably necessary to protect a trade secret.¹ Employers generally need to show the worker had meaningful exposure to proprietary client information, not just routine customer contact.

The Notice Employers Have to Give

Even a non-compete that meets every substantive requirement is void if the employer botched the notice. The procedural rules trip up employers more often than the salary thresholds do.

For a new hire, notice has to be delivered before the worker accepts the job offer. For a current employee, the employer has to give notice at least 14 days before either the covenant takes effect or before any new compensation or changed terms that serve as consideration for it.¹ Missing either deadline kills the agreement.

The notice has to be a separate document from the employment contract or any other covenants. It has to be written in clear, conspicuous terms in the language the parties normally use to discuss the worker’s performance, and the worker has to sign it.¹ A non-compete buried inside a lengthy handbook or standard offer letter does not satisfy this.

The notice itself has to include a copy of the agreement containing the covenant, identify the agreement by name, state that it contains a restriction on future employment, and direct the worker to the specific sections where the covenant appears.¹

Healthcare Providers Are Fully Exempt

SB 25-083, effective August 6, 2025, removed healthcare providers from the highly compensated worker exemption entirely. Physicians, advanced practice registered nurses, and dentists cannot be bound by a non-compete or a customer non-solicitation covenant restricting their practice in Colorado, regardless of income.³

The law also bars any agreement that stops a healthcare provider from telling current patients, before leaving a practice, that:

the provider will keep practicing medicine, nursing, or dentistry;
the provider can be reached at a new location; and
the patient has the right to choose any healthcare provider.

Employers cannot repackage these restrictions as trade secret protection or customer non-solicitation to work around the ban. Healthcare practices frequently used those categories to keep departing doctors from notifying their patient panels; under current law, any such restriction is void.

What Employers Can Still Require

Training Cost Repayment

An employer can require a departing worker to repay the cost of specialized training, but only if the training is distinct from normal on-the-job instruction. The training also has to meet any requirements the Colorado Attorney General sets on credential transferability.¹ Recovery is limited to reasonable costs and has to decrease proportionally over two years based on months since the training was completed. Only public employers may use a proration period longer than two years. A repayment obligation also cannot violate the federal Fair Labor Standards Act or Colorado wage law, meaning it cannot push a worker’s effective pay below minimum wage.

Confidentiality for Actual Trade Secrets

Confidentiality agreements that protect real trade secrets sit outside the salary thresholds and can apply to any worker. The information has to actually qualify as a trade secret under the Colorado Uniform Trade Secrets Act: secret, valuable because it is secret, and protected by reasonable steps to keep it that way.⁴ General industry knowledge, skills picked up on the job, and publicly available information do not qualify, and labeling something a trade secret in a contract does not make it one.

What Workers Can Recover

An employer that enters into, presents as a condition of employment, or tries to enforce a void non-compete owes a $5,000 penalty per affected worker. Workers can also recover actual damages, reasonable costs, and attorney fees in a private lawsuit. The Colorado Attorney General has independent enforcement authority and can recover treble damages when an employer improperly collects on a void training reimbursement.¹

Fee-shifting is what gives the statute practical teeth. Without it, most workers would never challenge a void non-compete because the legal bill would dwarf the $5,000 penalty. With it, an attorney can take the case knowing the employer covers costs if the worker wins.

A limited good-faith defense exists. If the employer proves it genuinely and reasonably believed the agreement was lawful, the court has discretion to reduce or eliminate the penalty.¹ The employer carries the burden. Simple ignorance of the law is unlikely to meet it.

Violating C.R.S. § 8-2-113 is also a class 2 misdemeanor, punishable by up to 120 days in jail, a fine of up to $750, or both.⁵ Criminal prosecution is rare, but it runs independently of the civil remedies, so the same conduct can produce both a misdemeanor charge and a civil judgment.

1
Justia Law. Colorado Revised Statutes 8-2-113 – Unlawful to Intimidate Worker – Agreement Not to Compete – Prohibition – Exceptions – Notice – Rules – Definitions
2
Colorado Department of Labor and Employment. Publication and Yearly Calculation of Adjusted Labor Compensation
3
Colorado General Assembly. SB25-083 Limitations on Restrictive Employment Agreements
4
Justia Law. Colorado Code 7-74-102 – Definitions
5
Justia Law. Colorado Revised Statutes 18-1.3-501 – Penalties