Colorado Employment Contracts: Agreements and Your Rights

Quick Answer: Colorado is an at-will employment state but enforces employment contracts. Colorado restricts non-compete agreements more than many states—they're void for workers earning under a certain threshold. NDAs cannot prevent reporting discrimination or illegal conduct. Severance agreements must provide adequate consideration.

Colorado provides meaningful protections in employment agreements.

Colorado Employment Contract Overview

At-Will Employment

Default rule:

• Employment is at-will
• Either party can end anytime
• No notice required
• Unless contract says otherwise

When Contracts Change This

Contracts may provide:

• Term of employment
• Termination for cause only
• Notice requirements
• Severance provisions

Types of Employment Agreements

Employment Contracts

May include:

• Duration of employment
• Compensation terms
• Job duties
• Termination provisions
• Restrictive covenants

Offer Letters

Often contain:

• Position and salary
• Start date
• At-will statement
• Basic terms

Non-Compete Agreements

Restrict:

• Working for competitors
• Limited time and geography
• Subject to Colorado restrictions

Non-Disclosure Agreements (NDAs)

Protect:

• Trade secrets
• Confidential information
• Cannot prevent reporting illegal conduct

Severance Agreements

Provide:

• Payment upon termination
• In exchange for releasing claims
• May include restrictive covenants

Arbitration Agreements

Require:

• Disputes resolved through arbitration
• Instead of court
• Generally enforceable

Colorado Non-Compete Restrictions

Worker Threshold

Non-competes void for:

• Workers earning under threshold
• Approximately $112,500/year (adjusted)
• Check current threshold amount

Highly Compensated Exception

May be enforceable for:

• Executives and management
• Workers above salary threshold
• Still must be reasonable

Other Restrictions

Also void for:

• Physicians (patient care)
• Certain professionals
• Agreements that are too broad

Reasonableness Required

If above threshold:

• Reasonable geographic scope
• Reasonable duration
• Legitimate business interest
• Not unduly restrictive

Non-Solicitation Agreements

Customer Non-Solicitation

May be enforceable:

• More likely than non-competes
• Must be reasonable in scope
• Cannot be overly broad

Employee Non-Solicitation

May restrict:

• Recruiting former colleagues
• Must be reasonable
• Time-limited

NDA Limitations in Colorado

Cannot Prevent

NDAs void if they:

• Prevent reporting discrimination
• Prevent reporting illegal conduct
• Prevent talking to CCRD/EEOC
• Prevent whistleblowing

Trade Secret Protection

Still allowed:

• Legitimate trade secrets
• Confidential business information
• Customer lists (may be limited)

Severance Agreements

What They Include

Common terms:

• Severance payment
• Release of claims
• Non-disparagement
• Reference provision
• Confidentiality
• Non-compete (if enforceable)

Consideration Required

Must receive:

• Something of value
• Beyond what's already owed
• Payment, benefits, or other consideration

Claim Releases

May waive:

• Discrimination claims
• Wrongful termination claims
• Most employment claims

OWBPA for Older Workers

Workers 40+:

• 21 days to consider (individual)
• 45 days (group layoffs)
• 7-day revocation period
• Must advise to consult attorney

Arbitration Agreements

Enforceability

Generally enforceable:

• Must be knowing
• Must be voluntary
• Clear terms

What You Give Up

May waive:

• Jury trial rights
• Class action rights
• Public court proceedings

Exceptions

May still file:

• CCRD complaints
• EEOC charges
• Certain statutory claims

Before Signing

Review Carefully

Check for:

• At-will language
• Restrictive covenants
• Arbitration clauses
• Choice of law provisions
• Termination terms

Red Flags

Be cautious of:

• Overly broad non-competes
• Unreasonable NDAs
• One-sided arbitration
• Waiver of statutory rights

Negotiation

Consider negotiating:

• Non-compete scope
• Severance provisions
• Arbitration terms
• Notice requirements

Common Scenarios

Scenario 1: Non-Compete Below Threshold

Situation: Earn $80,000, employer presents non-compete.

Analysis: Below salary threshold. Non-compete is void under Colorado law.

Scenario 2: Severance Offered

Situation: Laid off, offered 2 weeks pay to sign release.

Analysis: Consider what you're releasing. Use review period. May negotiate more.

Scenario 3: NDA Prevents Reporting

Situation: NDA says can't disclose anything to anyone.

Analysis: Cannot prevent reporting illegal conduct or discrimination. That provision void.

Scenario 4: Arbitration in Job Offer

Situation: Job offer includes mandatory arbitration.

Analysis: Common and generally enforceable. Understand you waive jury trial.

Scenario 5: Non-Compete After Leaving

Situation: Left job, have non-compete, want to work for competitor.

Analysis: Check salary threshold. Assess reasonableness. May be void or unenforceable.

Breach of Contract

If You Breach

Employer may:

• Seek injunction
• Sue for damages
• Recover attorney's fees (if provided)

If Employer Breaches

You may:

• Sue for damages
• Recover lost wages
• Recover promised benefits

Statute of Limitations

Colorado deadlines:

• Written contracts: 3 years
• Breach of fiduciary duty: 3 years

Lawful Activities Protection

Colorado Unique Law

Cannot be fired for:

• Legal off-duty activities
• Marijuana use (off-duty, generally)
• Political activities
• Lawful hobbies

How It Affects Contracts

Contract cannot require:

• Waiving lawful activity rights
• Prohibiting legal off-duty conduct
• May void such provisions

Frequently Asked Questions

Are non-competes enforceable in Colorado?

Only for workers above the salary threshold (approximately $112,500) and only if reasonable.

Can my employer enforce an NDA to stop me from reporting discrimination?

No. NDAs cannot prevent reporting discrimination or illegal conduct.

Do I have to sign a severance agreement?

No. But you forfeit severance payment if you don't. You can negotiate.

Can I negotiate my employment contract?

Yes. Many terms are negotiable, especially for professional positions.

What is Colorado's non-compete salary threshold?

Approximately $112,500/year (adjusted annually). Below this, non-competes are void.

Related Topics

• Colorado Employment Law Hub
• Colorado Non-Compete Agreements
• Colorado Severance Agreements
• Colorado At-Will Employment

Take Action

Before signing any agreement:

1. Read entire document carefully
2. Check non-compete against salary threshold
3. Identify NDA restrictions
4. Understand arbitration terms
5. Consider consulting employment attorney

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Legal Disclaimer

This article provides general information about employment contracts in Colorado and is not legal advice. For specific advice, consult a licensed Colorado employment attorney.

For official information:

• Colorado Bar Association: https://www.cobar.org | 303-860-1115