Colorado Non-Compete Agreement

Introduction

Key Things to Know

1. 1

   A non-compete agreement is a contract in which one party, usually an employee, agrees not to compete with a business for a set time and area after the relationship ends. In Colorado it is void unless it fits a narrow statutory exception.

2. 2

   Colorado voids non-competes by default under C.R.S. Section 8-2-113(2)(a): any covenant that restricts a person's right to receive compensation for their labor is void, except as allowed in subsections (2)(b) and (3).

3. 3

   The main exception has a salary floor. Section 8-2-113(2)(b) allows a non-compete only for a highly compensated worker earning at or above the CDLE threshold, which is $130,014 in annualized cash compensation for 2026. A customer non-solicitation covenant needs 60 percent of that, $78,008.40 for 2026.

4. 4

   Even above the threshold, a Colorado non-compete is valid only if it is for the protection of trade secrets and no broader than reasonably necessary. Courts in Colorado generally weigh duration, geography, and scope against that trade-secret purpose.

5. 5

   Colorado requires a separate written notice. Section 8-2-113(4) makes the employer give the worker notice of the covenant in a separate document, in clear and conspicuous terms, before a new hire accepts or at least 14 days before it takes effect for a current worker, and the worker must sign.

6. 6

   Some covenants are always allowed regardless of salary: a covenant tied to the purchase and sale of a business (Section 8-2-113(3)(c)), a reasonable confidentiality provision (3)(b), recovery of distinct training expenses (3)(a), and apprenticeship scholarship repayment (3)(d).

7. 7

   An employer that presents or tries to enforce a void non-compete owes actual damages and a $5,000-per-worker penalty plus attorney fees, so Colorado employers often protect information with a confidentiality agreement and the Colorado Uniform Trade Secrets Act (C.R.S. Section 7-74-101 et seq.) instead.

Colorado Requirements for Non-Compete Agreement

• Void by Default

  In Colorado a non-compete is void unless it fits a narrow exception. C.R.S. Section 8-2-113(2)(a) makes any covenant not to compete that restricts a person's right to receive compensation for their labor void, except as allowed in subsections (2)(b) and (3). An ordinary employee non-compete that does not meet an exception cannot be enforced in Colorado.

• Highly Compensated Salary Floor

  A non-compete is allowed only for a highly compensated worker earning at or above the annual CDLE threshold, which is $130,014 in annualized cash compensation for 2026 (C.R.S. Section 8-2-113(2)(b)). The worker must meet the threshold both at signing and at enforcement. This figure adjusts each year, so confirm the current CDLE amount and do not rely on any other state's salary number.

• Trade-Secret Purpose and Reasonable Scope

  Even above the salary floor, a Colorado non-compete is valid only if it is for the protection of trade secrets and no broader than reasonably necessary (C.R.S. Section 8-2-113(2)(b)). Colorado does not set a fixed maximum duration or distance; courts in Colorado generally weigh the time, geography, and restricted activities against the specific trade secrets at issue, so keep the restriction narrow.

• Separate Written Notice Required

  C.R.S. Section 8-2-113(4) requires the employer to give the worker notice of the covenant in a separate document from other covenants, in clear and conspicuous terms. A prospective worker must receive it before accepting the offer; a current worker at least 14 days before it takes effect or before compensation changes. The worker must sign to acknowledge receipt.

• Customer Non-Solicitation at 60 Percent

  A covenant not to solicit the employer's customers is allowed for a worker earning at least 60 percent of the highly-compensated threshold, or $78,008.40 for 2026 (C.R.S. Section 8-2-113(2)(d)). It must still protect trade secrets and be no broader than reasonably necessary. This lower-threshold option lets employers protect customer relationships when a full non-compete would be void.

• Business-Sale and Other Permitted Covenants

  Some covenants are allowed regardless of salary: a covenant tied to the purchase and sale of a business or its assets (C.R.S. Section 8-2-113(3)(c)), a reasonable confidentiality provision (3)(b), recovery of distinct training expenses that decreases over two years (3)(a), and repayment of an apprenticeship scholarship (3)(d). These sit outside the employee non-compete ban.

• Penalties for a Void Covenant

  An employer that presents to a worker, enters into, or attempts to enforce a covenant void under Section 8-2-113 is liable for actual damages and a penalty of $5,000 per worker or prospective worker, plus reasonable attorney fees and costs, and a court can enjoin the conduct. Confirm the salary threshold, trade-secret purpose, and notice steps before anyone signs.

• Protect Trade Secrets Another Way

  Because most non-competes are void and even a valid one must be tied to trade secrets, Colorado employers often rely on a confidentiality or non-disclosure agreement (permitted at Section 8-2-113(3)(b)) and the Colorado Uniform Trade Secrets Act (C.R.S. Section 7-74-101 et seq.) to protect confidential information without a broad restriction on where a former worker can work.