Restrictions That Invalidate Your Colorado Non-Compete Agreement

Posted May 30, 2025 in Uncategorized

Non-compete agreements are essential protections for companies in highly competitive markets. Colorado businesses usually require non-compete agreements with certain employee roles (outside sales, C-suite), with contractors, and sometimes with other businesses. These agreements prevent the signing party from using proprietary information to benefit a competitor.

As a Colorado business owner, your eligibility for damages or the ability to otherwise exact legal penalties for violations of non-compete agreements rests on how solid the agreement is in the first place. Our Colorado  commercial contract lawyer servicing Colorado drafts bespoke non-compete agreements that withstand the toughest legal scrutiny.

Features of a Solid Non-Compete Agreement

Non-compete agreements are intended to protect the business requiring it. However, Colorado judges will often void a non-compete agreement that sets unreasonable strictures on the duration or geographic scope of the limitation. For example, you may restrict an outside salesperson from working with a direct competitor in your city, but it would be unreasonable to restrict the salesperson from working for a similar business located three states away.

Furthermore, the duration of a non-compete agreement cannot be left open or in perpetuity. Agreements must include a specific, reasonable end date. However, the “reasonableness” of the duration can vary; some courts have upheld agreements with a duration of five years, while others have nullified agreements with much shorter durations. Our attorneys are well versed in current case law and can advise you of the likelihood of your proposed duration being enforced.

Similarly, Colorado courts review geographic limitations and consider their scope in the totality of the circumstances. Geographic restrictions may vary; if your company only operates in Colorado, then a nationwide limitation in your competition agreement may be unreasonable. For operating businesses, though, a limited nationwide geographic scope may be more reasonable, depending on how niche your business is.

Non-Compete Agreements Should Not Be Overly Restrictive

Courts evaluate the restrictiveness of non-compete agreements on more than just the geographical scope, limitations, and duration. Some non-compete agreements are very precise with the behaviors that the individual may or may not engage in and which jobs they may or may not engage in.

For example, it may be reasonable for a company operating in Colorado to prohibit a Marketing Director from engaging as a Marketing Director for a competitor in the same region; however, prohibiting a Director of Finance from taking a position as a Marketing Director in the same region may be overly restrictive. While it is possible that the DoF from Company A may divulge confidential financial information to their new employer, Company B, it is unlikely that an experienced professional would burn so many professional bridges. However, if your business is impacted by a former employee violating their non-compete agreement, we can support you in initiating legal action.

Changes in Colorado Non-Compete Agreements

Colorado’s legislature recently amended state laws covering non-compete agreements, specifically impacting healthcare providers and individuals who earn a specific amount of annualized cash compensation. If your business is healthcare-related, or if you have individuals whose annual compensation is equal to or greater than 60% of the threshold for “highly compensated” employees, then your current non-compete agreement may need to be revised to comply with changes in the statute.

Professional Legal Advice For Solid Non-Compete Agreements

Preserving your business’s competitive edge often rests on the strength of your non-compete agreements. At Volpe Law LLC, we draft individualized non-compete agreements based on the nature of the other party’s position, recent Colorado case law, and current state statutes covering these legal documents. We can advise you of any vulnerabilities you may have with your current agreements, renegotiate existing agreements, and assist with enforcing terms. Please contact us today for a complimentary discovery call.