CRS 8-2-113: Colorado Non-Compete Enforceability and Exceptions

Under Colorado non-compete law, almost every agreement that limits where you can work after leaving a job is void. The state’s rule, set out in C.R.S. 8-2-113 and reshaped by HB 22-1317 in 2022 and SB 25-083 in 2025, allows only a handful of narrow exceptions: high earners whose agreements protect trade secrets, sales of a business, certain customer non-solicitation clauses, reasonable confidentiality provisions, and limited training-cost repayment deals. Employers who present or try to enforce a prohibited agreement owe $5,000 per worker plus actual damages and attorney fees.¹

The Starting Point: Void by Default

Any agreement restricting a person’s right to earn a living from any employer is void unless it fits one of the statute’s exceptions.¹ That covers employees and independent contractors, and it does not matter what the document calls itself. If the practical effect is keeping you from joining a competitor, starting a rival business, or working in the same field, the statute treats it as a covenant not to compete.

Colorado and federal case law from before August 10, 2022, still applies to questions of scope and whether a particular agreement counts as a prohibited covenant. The 2022 reforms did not wipe the slate clean; earlier rulings on reasonableness and tailoring continue to matter.

When a Non-Compete Can Actually Be Enforced

A non-compete survives only if the worker is a “highly compensated worker” under the annual threshold set by the Colorado Department of Labor and Employment. For 2026, that figure is $130,014 in annualized cash compensation.² Clearing that bar is necessary but not sufficient. The agreement also has to protect trade secrets, and it can be no broader than reasonably necessary for that purpose.¹

Compensation is tested twice: when you sign, and when the employer tries to enforce. If your pay falls below the threshold at either point, the non-compete is void. Annualized cash compensation includes gross salary, wages, fees, bonuses, and commissions. If you have been on the job less than a year, the question is whether you would reasonably expect to clear the threshold over a full calendar year.¹ CDLE adjusts the dollar figure every year, and it cannot fall below the level it stood at on August 10, 2022. Check the current number before signing or enforcing anything.

Customer Non-Solicitation Agreements

Restrictions on soliciting your former employer’s customers use a lower earnings floor: 60 percent of the highly compensated worker threshold, which comes to $78,008.40 for 2026.¹² The same trade-secret purpose and tailoring rules apply, and the same two-point compensation test governs. Sign at $80,000 but drop to $75,000 before you leave, and the non-solicitation clause is void.

Confidentiality Provisions That Cross the Line

Confidentiality and trade secret provisions have their own carve-out and are not subject to the compensation thresholds. A reasonable clause is allowed as long as it is relevant to the employer’s business.¹ But the statute lists categories a confidentiality agreement cannot reach:

Information that comes from your general training, experience, knowledge, or skills, whether picked up on the job or elsewhere.
Information that is readily ascertainable to the public.
Information you have a legal right to disclose, including under whistleblower protections.

This is where employers push hardest. A confidentiality clause written broadly enough to stop you from using your professional skills at a new job is a non-compete in disguise, and courts treat it that way. Genuinely proprietary information is fair game; your ability to do your work is not.

Training Repayment Agreements

Employers can require you to repay the cost of specialized training if you leave within a set period, but the rules are strict. The training has to be distinct from normal on-the-job instruction, and any repayment is capped at the employer’s reasonable actual costs.¹

The amount you owe must decrease proportionally over the two years after you finish the training. Training that cost the employer $12,000 shrinks to a $6,000 obligation at the one-year mark and disappears entirely at 24 months. Public employers can use a longer paydown period. The training must also meet attorney general rules on the transferability of any credentials it produces, and the repayment structure cannot violate the federal Fair Labor Standards Act or Colorado wage law. An arrangement that effectively drags your pay below minimum wage fails on that ground alone. A separate provision permits scholarship repayment agreements for apprenticeship programs when the recipient does not meet the scholarship conditions.

Sale of a Business

Non-competes tied to the purchase and sale of a business, an ownership interest in a business, or substantially all of its assets remain permissible.¹ If you sell your company and the buyer wants you to stay out of the industry for a period, that agreement sits outside the general ban.

SB 25-083, effective August 6, 2025, added a duration cap for minority owners. If you hold less than 50 percent of a business and received your interest as equity compensation or in connection with services you performed, the maximum length of a sale-related non-compete is calculated by dividing what you received from the sale by your average annualized compensation from the business over the two years before the sale (or your full tenure, whichever is shorter).³ Take $200,000 out of a sale with average annual compensation of $100,000, and the non-compete tops out at two years. The rule keeps buyers from binding small equity holders to restrictions that dwarf what they were paid.

Physicians and Health-Care Providers

A non-compete restricting a physician’s right to practice medicine is void. Other provisions in a physician’s employment or partnership agreement can still stand, including clauses requiring payment of damages reasonably related to the injury caused by the physician’s departure.¹ A former practice group can sue for the financial hit tied to lost patients but cannot get a court order keeping the physician from practicing.

SB 25-083 broadened these protections. The highly compensated worker exception no longer applies to physicians, advanced practice registered nurses, or dentists, so even a surgeon earning $500,000 cannot be bound by a non-compete in Colorado.³ Agreements also cannot prevent or materially restrict a departing health-care provider from telling patients about their continuing practice, sharing new contact information, or informing patients of their right to choose a provider. That right used to exist only for physicians treating rare disorders; it now applies to every health-care provider and every patient.

Notice Requirements That Can Sink an Otherwise Valid Agreement

Even a non-compete that clears every substantive rule is void without proper notice. The timing depends on who is signing:¹

Prospective workers must receive the notice and the full agreement terms before accepting the offer of employment.
Current workers must get the notice at least 14 days before the earlier of the covenant’s effective date or the effective date of any new compensation or changed terms that serve as consideration for the agreement.

The notice has to be a separate document from the rest of your employment paperwork. It must be written in clear, conspicuous terms in the language you and your employer use to communicate about work. It must identify the agreement by name, state that it contains a non-compete that could restrict your future employment, and point you to the specific sections containing the restriction. You have to sign the notice. Handing a new hire a stack of onboarding documents on day one, with the non-compete language buried in an offer letter or handbook, fails these requirements. Notice failures alone make an agreement unenforceable no matter how well it was drafted otherwise.

Venue and Choice of Law

If you primarily lived or worked in Colorado when your employment ended, your employer cannot force you into another state’s courts to fight over enforceability, and Colorado law governs regardless of what the contract says about choice of law.¹ That closes off a common workaround, where a Colorado employee is asked to sign under Delaware or California law to sidestep the state’s restrictions. If the work happened here, Colorado’s rules apply.

What Employers Owe When They Get It Wrong

It is unlawful in Colorado not just to enforce a void non-compete but to enter into one, offer it as a condition of employment, or attempt to enforce it.¹ A violation costs the employer $5,000 per worker or prospective worker harmed, plus actual damages. Workers who sue can also recover reasonable costs and attorney fees. The attorney general can bring an enforcement action and obtain injunctive relief, and where an employer has collected or tried to collect under an unlawful training repayment agreement, the attorney general can recover three times the amount involved.

A limited good-faith defense exists. An employer that shows the violation was made in good faith with reasonable grounds for believing the agreement was lawful may have the $5,000 statutory penalty reduced or eliminated at the court’s discretion. That defense reaches only the statutory penalty; it does not shield the employer from actual damages or attorney fees.

1
Justia. Colorado Code 8-2-113 – Unlawful to Intimidate Worker – Agreement Not to Compete
2
Colorado Department of Labor and Employment. INFO 1 2026 COMPS and PAYCALC Orders
3
Colorado General Assembly. SB25-083 Limitations on Restrictive Employment Agreements