States continue to narrow the enforceability of non-compete agreements through various requirements, such as minimum salary thresholds and notice requirements
Other legislation has limited the length of enforceable restrictions – from two years to 12 months – with overbroad agreements becoming void
Employers must ensure they comply with these requirements, as states are also increasing penalties for overbroad agreements to include fines and imprisonment
Non-compete agreements can be used to protect employers that spend the time and resources to train employees, share unique business insights with them, or introduce them to their customers and suppliers. But many times courts find that employers exploit restrictive covenants when seeking to restrain trade of employees without legitimate business interests – i.e. a sandwich shop attempting to prevent minimum wage employees from working at other sandwich shops.
The response throughout United States has rapidly changed the non-compete landscape, with differences from state to state. State legislation and litigation has focused on the minimum required criteria to find a non-compete agreement enforceable, which can include, among other things:
For example, Colorado’s law, which was revised in June 2022, now significantly limits an employer’s ability to enforce non-competes executed after Aug....
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