Colorado Non-Compete Agreements: 2022 Law Changes and Limits

Quick Answer: Colorado has some of the strictest non-compete laws in the nation after 2022 reforms. Non-competes are generally void and unenforceable unless the employee earns above the threshold of $127,091 (2026) and meets narrow exceptions. For workers below threshold, non-competes are prohibited. Even valid non-competes must meet reasonableness standards. Colorado strongly disfavors these restrictions.

Colorado workers have significant freedom to change jobs.

Colorado's Non-Compete Law

2022 Reforms

Major changes:

• Most non-competes now void
• High-earner exception only
• Strict disclosure requirements
• Criminal penalties possible
• Employee-friendly reforms

General Rule

Non-competes void unless:

• Employee earns above threshold
• Falls within narrow exception
• Meets disclosure requirements
• Reasonable in scope

Earnings Threshold

2026 threshold:

• $127,091 annual compensation
• Adjusted annually for inflation
• Measured at time of enforcement
• High bar for applicability

When Non-Competes Are Allowed

High-Earning Employees

Exception for:

• Employees earning above threshold
• Even then, must be reasonable
• Time, geography, scope limits
• Disclosure requirements apply

Sale of Business

Enforceable when:

• Selling business interest
• Part of sale agreement
• Protecting goodwill
• Traditional exception

Trade Secrets

May restrict:

• Use of trade secrets
• Disclosure of confidential info
• Even for lower earners
• Must be genuine secrets

Recovery of Training Expenses

Narrow exception:

• Apprenticeship situations
• Specialized training
• Below threshold, 2 years max
• Specific requirements

Disclosure Requirements

Written Notice Required

Employer must:

• Provide separate written notice
• Before agreement signed
• State non-compete terms
• Identify applicable exception

Notice Contents

Must include:

• Clear non-compete terms
• Statement that agreement is non-compete
• Before employee accepts

Consequences of Non-Disclosure

If employer fails:

• Agreement void
• Cannot enforce
• May face penalties

Non-Solicitation Agreements

Customer Non-Solicitation

For workers under threshold:

• Non-solicitation threshold is $76,254 (2026)
• 60% of non-compete threshold
• Below this, cannot prohibit customer solicitation
• Only trade secret protection applies

Employee Non-Solicitation

Treated similarly:

• Must meet threshold
• Or narrow exception
• Cannot broadly restrict

Penalties for Violations

Criminal Penalties

Employer can face:

• Class 2 misdemeanor
• For void non-competes
• First offense
• Serious consequence

Civil Penalties

Employee can recover:

• Actual damages
• Attorney's fees
• May void agreement

Per Employee Penalty

For each violation:

• Up to $5,000 per employee
• Criminal prosecution possible
• Strong deterrent

Reasonableness Still Required

Even for High Earners

Must be reasonable:

• Time (typically 1-2 years max)
• Geography (where employee worked)
• Scope (actual competitive harm)

Colorado Courts

Historically skeptical:

• Blue pencil doctrine limited
• Won't rewrite agreements
• Void if overbroad

What Employers Can Do

Confidentiality Agreements

Still permitted:

• Protect trade secrets
• Confidential information
• No earnings threshold
• Must be genuine secrets

Invention Assignment

Permitted:

• Work-product assignment
• Intellectual property
• No non-compete element

Garden Leave

Possible approach:

• Pay employee during restriction
• Continuing compensation
• Still subject to rules

Common Scenarios

Scenario 1: Under Threshold Employee

Situation: Software developer earning $80,000. Employer demands non-compete.

Analysis: Below threshold. Non-compete void. Can work for competitor immediately.

Scenario 2: Above Threshold Executive

Situation: VP earning $200,000 with 2-year, nationwide non-compete.

Analysis: Above threshold, but nationwide may be overbroad. Must be reasonable in geography.

Scenario 3: No Written Notice

Situation: Non-compete buried in employment documents. No separate notice.

Analysis: Disclosure requirement violated. Agreement void even if above threshold.

Scenario 4: Post-2022 Enforcement

Situation: Signed non-compete in 2020 earning $100,000. Now being enforced.

Analysis: If enforced post-2022 and below threshold, likely void under new law.

Existing Agreements

Pre-2022 Non-Competes

Status:

• New law applies to enforcement
• Old agreements may be void
• Threshold applies at enforcement
• Law is prospective for enforcement

What This Means

If you have old non-compete:

• May not be enforceable today
• Depends on current earnings
• Analyze under new law
• Consult attorney

Employee Best Practices

Before Signing

Do:

• Check your earnings vs. threshold
• Request written notice
• Understand terms
• Consult attorney
• Negotiate if possible

If Facing Enforcement

Do:

• Review current earnings
• Check disclosure compliance
• Assess reasonableness
• Consult attorney
• Know your rights

Frequently Asked Questions

Are non-competes enforceable in Colorado?

Generally no. Only for high earners (above $127,091 in 2026) with proper disclosure, and must be reasonable.

What's the earnings threshold?

$127,091 for 2026. Adjusted annually for inflation.

What if I signed before 2022?

New law applies to enforcement. If you're below threshold now, likely unenforceable.

Can employer sue me for violating?

If agreement is void, no. If valid (high earner, proper disclosure, reasonable), possibly.

What about customer non-solicitation?

Same threshold applies. Below threshold, generally cannot prohibit.

Should I get legal advice?

Yes, especially if significant non-compete. Colorado law is complex post-2022.

Related Topics

• Colorado Employment Contracts
• Colorado Severance Agreements
• Colorado At-Will Employment
• Colorado Employment Law Hub

Take Action

If facing non-compete issues:

1. Determine your earnings vs. threshold
2. Check if proper disclosure was given
3. Assess reasonableness of terms
4. Know agreement may be void
5. Consult employment attorney
6. Don't assume it's enforceable

Colorado strongly protects worker mobility.

Legal Disclaimer

This article provides general information about non-compete agreements in Colorado and is not legal advice. Law changed significantly in 2022. For advice about your specific circumstances, consult a licensed Colorado employment attorney.