Colorado employers have less than two months to bring their noncompetition restrictions into compliance with HB22-1317, a bill passed by the Colorado Legislature in May 2022.
HB22-1317, also known as the Restrictive Employment Agreements Act (the Act), will significantly change Colorado's restrictive covenants statute, C.R.S. § 8-2-113, limiting the enforceability of noncompetition and customer nonsolicitation restrictions. Gov. Jared Polis signed the Act on June 8, 2022, making it effective on Aug. 10, 2022. Notably, the new limitations on the ability to enforce noncompetition restrictions are not retroactive.
Under the Act, noncompetition and nonsolicitation of customer restrictions remain void unless they fall within certain statutory exceptions. The Act, however, substantially alters some of these widely used exceptions, removing the management and executive personnel exception and altering the trade secrets exception so that it applies only to highly compensated employees (earning $101,250/year or more) if the noncompete is for the protection of trade secrets and is no broader than reasonably necessary to protect trade secrets. Additionally, the Act imposes new notice requirements, expands penalties for employers that violate the statute and, restricts agreements about choice of law and choice of venue.
The most important changes under the Act are summarized below.
Certain noncompetition and nonsolicitation of customer restrictions will...
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