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Colorado law restricts non-compete agreements

On Behalf of | Nov 7, 2022 | Uncategorized

Recently, a new law went into effect in Colorado that restricts the power of non-compete agreements. These agreements are now enforceable only in cases involving the sale of a business or certain highly-paid workers.

Pro and con

Many businesses ask new employees to sign non-compete agreements. Typically, these contracts temporarily restrict the worker’s ability to do work that competes with the business after they leave the company. The agreements may also restrict the worker’s ability to recruit colleagues or clients when setting up a new business.

For employers, these agreements can be a valuable way of protecting their businesses. After all, no employer wants to invest a lot of time training a new employee only to have that worker leave and use that knowledge to compete with the company.

But for employees, these agreements can be unnecessarily restrictive, preventing them from using their hard-earned skills and knowledge. It’s also important to note that a person who is trying to get hired may not feel free to refuse to sign a non-compete agreement. And if they are unfairly pressured into signing the agreement, perhaps the contract should not be considered legally valid.

Because of these complaints, courts and lawmakers in several states have chipped away at the enforceability of non-compete agreements. The new Colorado law is just the latest development in an ongoing nationwide debate.

Exceptions

But, while the Colorado law represents strong support for workers’ rights, it doesn’t protect everybody. In particular, many people in the tech industry may find that they fall into the exceptions to the new law.

These are workers who have devoted their careers to developing specialized skills. If they are suddenly fired, or if they simply decide they want to move on to a new position, should they be prevented from using these skills to make their living?

Attorneys can help people understand their rights and how the laws governing non-compete agreements may apply to them.