Non-Compete Agreement Colorado: Employee Rights and Enforceability

Many employees assume that signing a non-compete and/or non-solicitation agreement (a.k.a. “restrictive covenant”) at the time of hire creates an immediate, binding obligation that will restrict their professional activities until the term expires. In Colorado, these agreements are unenforceable unless they satisfy specific criteria. This guide clarifies the 2026 standards and your rights under Colorado non-compete law, giving you the tools you need to approach your next career move with total clarity.

• General rule - Most non-compete agreements in Colorado are void and unenforceable unless they meet certain criteria. 

• Income threshold - As of 2026, an employee must earn at least $130,014 for a non-compete to be enforceable and $78,008 for a non-solicitation to be enforceable. 

• Reasonableness – To be enforceable, the agreement must also be no broader than reasonably necessary in order to protect the employer’s trade secrets.

• Mandatory notice - For existing employees, Colorado law requires the employer to provide a separate, signed notice at least 14 days before the agreement takes effect. 

• Venue protection - If you primarily live and work in Colorado, state law ensures your legal disputes are heard in local courts, even if your contract specifies an out-of-state venue. 

• Liability consequences - Employers who try to enforce a void non-compete may be liable for actual damages, attorney fees, and a statutory penalty per worker. 

In Colorado, most non-compete agreements are void by default. Under Colorado's Restrictive Employment Agreements Act, the state outright prohibits employers from implementing non-competes unless they meet narrow exceptions and strict compensation requirements. 

An agreement typically fails if:

• The employee earns below the required compensation threshold either when they enter the agreement or when the employer attempts to enforce it.

• The restriction is not specifically tied to protecting trade secrets.

• The scope is overly broad in duration or geography.

• The employer failed to provide a separate, signed notice document. 

In other words, an employer's threat of enforcement does not mean the non-compete agreement is legally enforceable.

That’s not to say restrictive covenants are never enforceable. In Colorado, a non-compete agreement and/or non-solicitation agreement may be valid when it involves: 

1. Protected trade secrets - The agreement is reasonably tailored to protect the employer’s legitimate trade secrets, not general skills or industry knowledge.

2. A business sale - The agreement is established specifically to facilitate the purchase or transfer of a business entity. 

3. Training expense recovery - The agreement is used to recover education and training expenses for workers employed for less than two years. 

Even if an agreement falls into an exception, it must meet the strict criteria regarding income, scope, and notice. 

1. Income Thresholds

Colorado limits non-compete agreements to highly compensated employees. These salary thresholds are set by the Colorado Department of Labor and Employment (CDLE) and are adjusted annually on January 1 to account for inflation. Updates are published in the CDLE’s Publication and Yearly Calculation of Adjusted Labor Compensation (PAY CALC) Order. 

Under C.R.S. 8-2-113, employees who earn below the required level either at the time they enter into the agreement or at the time the agreement is being invoked/enforced generally cannot be bound by a restrictive covenant. 

2. Protection of Trade Secrets

To enforce a non-compete agreement under the trade secret exception, the employer must prove the restriction protects legitimate trade secrets, not just general skills or experience. 

Under the Colorado Uniform Trade Secrets Act (CUTSA), information is only a “trade secret” if: 

1. It is not generally known to the industry or public;

2. It provides actual and/or potential economic value to the owner; and

3. The owner has taken proactive steps to keep it confidential.

This matters because if the information you use at work is general industry knowledge or public information, an employer can’t legally use a non-compete to stop you from using it at a new job.

3. Reasonable Scope and Duration

Colorado law affirms the state’s prerogative: to protect workers’ mobility. If the agreement is broader in scope than what would be reasonably necessary to protect the employer’s interest in their trade secret(s), a judge can declare the agreement void. Courts oftentimes focus on how long after employment the agreement covers and the geographical locations to which it applies. 

4. Strict Notice Requirements

An enforceable non-compete requires strict adherence to notice protocols. Under C.R.S. 8-2-113(4), notice must be in a separate document, written in clear terms, and signed by the worker. Notice requirements also vary by the type of worker involved:

• Prospective workers - Notice must be provided before they accept the employment offer.

• Current workers - Notice must be provided at least 14 days before the effective date of the covenant or any change in employment terms.

If you want to understand how these rules are applied from the business side, you can also review Robinson & Henry’s employer-focused overview of non-compete agreements in Colorado.

Many Colorado workers find the “non-compete” label misleading. In truth, your obligations may be limited to a much narrower non-solicitation agreement, which would be governed by a completely different set of legal standards. 

Agreements that may apply to your situation include: 

• Non-compete agreement - The worker must earn annualized cash compensation equal to or greater than the threshold for highly compensated workers.

• Non-solicitation agreement – In Colorado, these are enforceable only if the employee earns at least 60 percent of the highly compensated worker threshold.

Agreement Type	Non-compete agreement	Non–solicitation agreement
Purpose	Limits on where or for whom an employee works.	Limits contacting customers or clients
2026 Salary Threshold	$130,014 or higher.	$78,008 or higher.
Focus	Protection of trade secrets.	Protection of trade secrets.
Notice Rule	14-day advance notice requirement.	14-day advance notice requirement.

In Colorado, the stakes are high for employers who use void restrictive covenants. Under state law, an employer who enters into, presents, or attempts to enforce a void agreement is subject to specific financial and legal consequences. 

If a court or arbitrator finds that your agreement is void, you could be entitled to the following: 

Remedy	Amount/Description
Statutory Penalty	$5,000 per worker or prospective worker harmed by the employer’s attempt to enforce a void non-compete.
Attorney Fees	The employer is liable for your attorney fees and court costs.
Actual Damages	Compensation for any financial loss you suffered due to the void agreement.
Injunctive Relief	A court order stopping the employer from trying to enforce the agreement against you.
Declaratory Judgment	A formal legal ruling declaring the agreement void and your ability to work elsewhere.

Colorado is one of the few states where violating a non-compete law can also be a criminal offense. Under state law, a person who uses force, threats, or intimidation to prevent someone from engaging in a lawful occupation, or who knowingly implements a void covenant, commits:

• Class 2 Misdemeanor - Punishable by up to 120 days in jail, a fine of up to $750, or both.

Judges may reduce or waive the $5,000 penalty if an employer proves they acted in “good faith,” believing the agreement was legal. 

Note that these penalties only apply to contracts signed or renewed on or after August 10, 2022; older agreements are governed by less punitive prior laws.

Even if a restrictive covenant reads valid on paper, there are several legal avenues available to challenge its enforcement or secure a release from its restrictions: 

• Court ruling - Employees or subsequent employers may seek a declaratory judgment from a court to determine if a non-compete is enforceable. 

• Litigating Venue - Employers can’t force employees who primarily live or work in Colorado to litigate non-compete disputes out of state. 

• Choice of law - Colorado law explicitly overrides contractual provisions that attempt to apply non-Colorado law or require adjudication in other venues. 

• Employer breach as defense - If an employer commits a “major” breach of the employment agreement, the employee may be relieved of their obligations. 

Employees may also seek a court ruling that a non-compete agreement is unenforceable, negotiate a clarification or release with an employer, or wait for an overly broad restriction to expire. Ultimately, the right approach will depend on the specific agreement and the employee’s role.

Speaking with a Colorado employment lawyer can help clarify whether a non-compete agreement is enforceable and what options may be available.

If you suspect you signed a restrictive agreement that falls under one of Colorado law’s legal exceptions but still wish to move on professionally, taking the following proactive steps can help reduce risk: 

• Verify enforceability - Check if your total compensation met the statutory threshold at the time of signing and if you received the required 14-day non-competition disclosure notice.

• Audit your information - Distinguish between protected trade secrets and your own “general knowledge and skills.”

• Secure a clean exit - Do not transfer or retain any company data. Misappropriation of information is often what triggers employer litigation.

• Seek legal guidance - If an employer threatens enforcement, they may be liable for your attorney fees and statutory penalties if the agreement is found to be void.

Speaking with a Colorado employment lawyer can help clarify whether a non-compete agreement is enforceable and what options may be available. 

Colorado non-compete disputes involve intricate assessments of state statutes that many general practitioners overlook. At Robinson & Henry, our employment attorneys provide the strategic guidance necessary to manage: 

• Enforceability reviews - Determining if your agreement is void based on the current year’s salary threshold.

• Notice compliance - Assessing whether your employer met the strict 14-day separate notice requirement. 

• Strategic defense - Defending your right to work or pursuing statutory penalties and attorney fees for void agreements.

Don’t leave your career mobility to chance. Call 303-688-0944 or schedule your case assessment online now. 

Under current Colorado non-compete law, most non-compete agreements are unenforceable. Only narrowly defined agreements that meet compensation, trade secret, and reasonableness requirements may be enforced.

Many employees are not legally bound by a non-compete agreement because it does not meet Colorado’s statutory requirements. Others may seek a court ruling, negotiate a release, or allow an invalid restriction to expire.

Often, they do not. Colorado courts closely scrutinize non-compete agreements and frequently reject overly broad or improperly issued restrictions.

Colorado law limits non-compete agreements to highly compensated employees. The salary threshold is set by the state and adjusted annually, and it must be met at the time the agreement is signed and enforced.

In many cases, yes. If a non-compete agreement does not meet Colorado’s legal requirements, it cannot be enforced, even if it was signed.

Colorado law does not require employers to pay employees during a non-compete period unless a separate agreement provides for compensation.

For employees who live or work primarily in Colorado, state law generally limits an employer’s ability to require non-compete disputes to be handled outside Colorado or under another state’s law.