Colorado lawmakers passed legislation May 10 that will significantly limit the practice of using noncompete agreements for lower-wage workers in the state.
Gov. Jared Polis is expected to sign the bill into law, which will become effective August 10.
Noncompete clauses in employment contracts place limits on where employees can work after they leave a job. These agreements prohibit an employee from working for a competitor or from starting a competing business within a geographical area for a certain period after leaving a job.
Tens of millions of U.S. workers have signed noncompete agreements with their employers. However, many employment experts believe that noncompete agreements should not be applied to low-wage workers, such as those in retail, health care, and leisure and hospitality jobs.
The Colorado law would limit noncompetes to people making more than $101,250 per year. "Noncompetes stifle innovation," said Rep. Kerry Tipper, D-Jefferson, the bill's prime sponsor. "They make it difficult for employers to recruit talent, and they make it difficult for talent to go places and move up the ladder. What the bill did was to try and put some more safeguards on those noncompete provisions."
The law will virtually end the practice of most noncompetes in the state, said Michael Greco, an attorney in the Denver office of Fisher Phillips. "It will also empower workers and the [state] attorney general to punish violations through lawsuits for damages, statutory penalties and...
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