Question 1

What is an employee NDA, and how is a severance NDA different?

Accepted Answer

An employee NDA is a contract in which a worker agrees to keep the employer's confidential information, such as trade secrets and pricing data, private during and after the job. A severance NDA is the version signed at separation, usually inside a release agreement in exchange for severance pay, and it often also keeps the departure terms confidential. Both are confidentiality agreements, and in Colorado both are limited by the POWR Act when they touch discrimination or unfair employment practices.

Question 2

Does the POWR Act apply to my Colorado NDA?

Accepted Answer

It applies whenever the agreement, whether signed at hire or at separation, limits either party's ability to disclose or discuss an alleged discriminatory or unfair employment practice. C.R.S. 24-34-407 makes such a provision void unless it satisfies the law's conditions, including that the restriction is mutual and that it lists the disclosures the worker may still make. It does not stop an NDA from protecting genuine trade secrets.

Question 3

Why does a Colorado NDA have to be mutual?

Accepted Answer

The POWR Act voids a confidentiality or non-disparagement provision unless it limits both parties equally. A term that gags the worker while leaving the employer free to speak does not comply. Colorado is unusual in this respect: many states restrict what an NDA can cover, but Colorado specifically requires the restriction to run in both directions to be enforceable at all.

Question 4

What disclosures must a Colorado NDA still allow?

Accepted Answer

The agreement must expressly state that it does not prevent the worker from disclosing to immediate family members, a religious advisor, a medical or mental health provider or a behavioral health support group, legal counsel, a financial advisor, or a tax preparer, or to any local, state, or federal government agency for any reason. That includes revealing the existence and terms of a settlement, and the law confirms such a disclosure is not disparagement.

Question 5

What happens if a Colorado NDA leaves out the required carve-outs?

Accepted Answer

The offending provision is void, so it cannot be enforced. Beyond that, the POWR Act exposes the employer to a penalty of $5,000 per violation, and the law commonly requires a separately signed addendum spelling out the worker's rights. Drafting the agreement compliant from the start, with the mutual terms and permitted-disclosure language, avoids both the penalty and an unenforceable clause.

Question 6

Can a Colorado employer still protect trade secrets in an NDA?

Accepted Answer

Yes. The POWR Act limits confidentiality of discrimination and unfair-practice information, not the protection of legitimate trade secrets. A Colorado employee or severance NDA can still protect client and pricing data, processes, and other proprietary information, and it should include the federal Defend Trade Secrets Act immunity notice like any well-drafted agreement.

Question 7

What federal rights does a Colorado NDA leave untouched?

Accepted Answer

On top of Colorado law, the federal Speak Out Act makes a pre-dispute NDA or non-disparagement clause unenforceable to the extent it covers a dispute involving sexual assault or sexual harassment. A worker also keeps the non-waivable right to report to agencies such as the EEOC, the NLRB, and the SEC. Those protections apply regardless of what a Colorado agreement says.

Colorado Employee and Severance NDA

Introduction

Key Things to Know

Key decisions before you file

Customize your Employee and Severance NDA Template with DocDraft

Colorado Requirements for Employee and Severance NDA

Colorado POWR Act (C.R.S. 24-34-407)

Frequently Asked Questions