True or False: Non-Compete Agreements are Never Valid in Colorado

November 11, 2020 | Bill Henry

Litigation Attorney Boyd Rolfson explains when a non-compete agreement is and is not valid in the state of Colorado.

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I want to talk with you for a moment today about a frequent topic that comes across my desk as an attorney here at Robinson & Henry P.C. That is the topic of non-compete agreements.

I get both employees and employers who contact me that want to know how to enforce or how they’re able to get out of the enforcement of a non-compete agreement. My name is Boyd Rolfson and I’m an Attorney in the Civil Litigation and Real Estate Department at Robinson & Henry.

What’s a Non-Compete Agreement?

Non-compete agreements are agreements that are put together by an employer for an employee to sign. The design of them is to protect the employer from the employee going and working for a competitor that is in the same type of business. Employers will try to limit their employees from leaving and going and working for the competition.

The Competing Problems

There are a lot of different state views and how non-compete agreements are treated. In Colorado, the law has struggled with the two competing problems of non-compete agreements.

  1.  The State of Colorado wants to protect businesses from being able to be competitive, to be able to market and to be able to produce their products and without that protection of their competition and their money that they put in.
  2. At the same time, Colorado law also seeks to protect workers and employees who have gained experience, who have gained knowledge over time and want to be able to use those skills to work where they want and to be able to work for whatever company they want to.

So with these two competing interests, Colorado has formulated their law on how they’re going to enforce non-compete agreements once sign. Generally speaking, a non-compete agreement in Colorado is not valid and is not enforceable on an employee, to give that employee the opportunity to work where they want and use their skills.

When is One Valid?

However, Colorado has designed a few exceptions to that rule. First of all, a non-compete may be valid against somebody who is at an executive or manager level at the employer. So think of someone who either has decision making ability or has the ability to hire fire employees, manages employees, if you are in one of those roles then a non-compete agreement may be valid.

The non-compete agreement has to be reasonable in two areas. First of all, it has to be reasonable in amount of time and generally courts in Colorado, look at how long the non-compete agreement goes after you terminate your employment. One or two years is generally found to be a reasonable amount of time, longer than that and especially longer than five years is not reasonable and a employer cannot limit you from working that long after you’ve terminated your employment.

The other area that the course look is the area of limiting you geographically, the area for which you can continue to work. They can’t have an employer cannot have an overall long reaching geographical area for example, the Western United States or the State of Colorado rather they must limit it to a smaller geographical reason perhaps 20 miles from their place of employment or perhaps, you know, the Denver Metro area.

As long as they have these different restrictions, then a court may find a non-compete agreement to be valid.

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