Non-compete agreements have become a popular tool for employers to protect their business interests. These agreements prevent employees from taking their skills and expertise to a competing company for a certain period of time after leaving their current employer. In Colorado, the law governing non-compete agreements is more restrictive than in some other states.
Colorado’s Non-Compete Agreement Law
Colorado has a statute that governs non-compete agreements. The law states that non-compete agreements are only enforceable if they meet the following criteria:
1. The agreement must be supported by a legitimate business interest.
2. The restriction must be reasonable in both duration and geographic scope.
3. The agreement must not be overly burdensome on the employee’s ability to work.
Legitimate business interests may include protecting confidential information or trade secrets, preserving customer relationships, or preventing the loss of goodwill. However, the employer must show that the restriction in the non-compete agreement is necessary to protect these interests and that the harm to the employee is outweighed by the benefits to the employer.
The duration of the non-compete agreement should be no longer than necessary to protect the employer’s interests. Typically, a duration of six to twelve months is considered reasonable. The geographic scope of the restriction should not be broader than necessary to protect the employer’s business interests. For example, a non-compete agreement that covers the entire state of Colorado may be overly broad if the employer’s interests are only located in a specific region.
Enforcing Non-Compete Agreements in Colorado
If an employer believes that an employee is violating a non-compete agreement, they may seek an injunction to prevent the employee from engaging in the restricted activity. Colorado courts have the authority to modify the terms of the non-compete agreement if they find that the agreement is overly restrictive.
However, employers who are found to have overly broad or unreasonable non-compete agreements may face consequences. Colorado law allows employees to recover attorney’s fees and costs if they are successful in challenging the enforceability of a non-compete agreement.
Conclusion
Colorado law is clear that non-compete agreements should be narrowly tailored to protect legitimate business interests and not impose an undue burden on employees. Employers should be cautious when drafting non-compete agreements to ensure that they meet these requirements, or they may find that their agreements are unenforceable or subject to modification. Employees who may be subject to non-compete agreements should carefully review the terms of the agreement and consult with an attorney to understand their rights.