Colorado Non-Compete Agreement
Colorado voids most non-compete agreements, allowing them only for highly paid workers ($130,014+) to protect trade secrets. Attorney review available.
Introduction
Colorado measures a non-compete, the familiar promise not to compete with a business for a set time and area after leaving, against C.R.S. Section 8-2-113, which clears it only for a highly compensated worker guarding trade secrets. In Colorado most non-competes are void. Under Colorado Revised Statutes Section 8-2-113(2)(a), any covenant not to compete that restricts a person's right to earn compensation for their labor is void, with only narrow exceptions. The main exception is for a highly compensated worker: Section 8-2-113(2)(b) allows a non-compete only when the worker earns at or above the annual Colorado Department of Labor and Employment threshold ($130,014 in annualized cash compensation for 2026), the covenant is for the protection of trade secrets, and it is no broader than reasonably necessary to protect that interest. A customer non-solicitation covenant is separately allowed at sixty percent of that threshold ($78,008.40 for 2026) under Section 8-2-113(2)(d). Colorado also requires a separate written notice before the worker signs, and an employer that presents or tries to enforce a void covenant faces actual damages, a $5,000-per-worker penalty, and attorney fees. Confidentiality provisions and a covenant tied to the sale of a business remain allowed. This page explains Colorado's rule and offers a template scoped to what Colorado actually permits. It is a state-law overview, not a promise that any given clause will hold up.
Key Things to Know
- 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
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
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
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
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
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
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.
Key decisions before you file
Before you file a Non-Compete Agreement in Colorado, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.
Open the Non-Compete Agreement guideCustomize your Non-Compete Agreement Template with DocDraft
Colorado Requirements for Non-Compete Agreement
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.
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.
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.
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.
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.
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.
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.
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.
Frequently Asked Questions
Only in narrow circumstances. Colorado Revised Statutes Section 8-2-113(2)(a) makes any covenant not to compete that restricts a person's right to earn compensation void, unless an exception applies. The main exception, Section 8-2-113(2)(b), allows a non-compete only for a highly compensated worker (earning at or above the annual CDLE threshold, $130,014 for 2026) where the covenant protects trade secrets and is no broader than reasonably necessary. An ordinary employee non-compete that does not meet those requirements is void in Colorado.
Colorado does not set a fixed maximum number of months. Even for a highly compensated worker, the covenant is valid under Section 8-2-113(2)(b) only if it is for the protection of trade secrets and no broader than reasonably necessary to protect that interest. Courts in Colorado generally test the duration, geographic area, and restricted activities against that trade-secret purpose, so a shorter, tightly scoped restriction tied to specific trade secrets is far more likely to hold up than a long, broad one.
Colorado ties enforceability to a salary floor set each year by the Colorado Department of Labor and Employment. For 2026 a worker must earn at least $130,014 in annualized cash compensation for a non-compete to be allowed under Section 8-2-113(2)(b), and the worker must meet that threshold both when signing and when the employer tries to enforce it. A customer non-solicitation covenant requires 60 percent of that figure, or $78,008.40 for 2026. These figures adjust annually, so confirm the current CDLE amount.
Yes. Section 8-2-113(4) requires the employer to give the worker a notice of the covenant in a separate document from any other covenants, in clear and conspicuous terms. A prospective worker must get the notice before accepting the offer, and a current worker at least 14 days before the covenant becomes effective or before compensation changes. The worker signs to acknowledge receipt. A covenant presented without this notice is not properly formed in Colorado.
Generally no. If the worker earns below the CDLE highly-compensated threshold ($130,014 for 2026), a non-compete restricting their ability to work is void under Section 8-2-113(2)(a), and no reasonableness showing saves it. A narrower customer non-solicitation covenant may be allowed if the worker earns at least 60 percent of the threshold ($78,008.40 for 2026) and it protects trade secrets. Confidentiality obligations and the Colorado Uniform Trade Secrets Act still apply regardless of pay.
Colorado penalizes it. An employer that presents to a worker, enters into, or attempts to enforce a covenant that is void under Section 8-2-113 is liable for actual damages and a penalty of $5,000 per worker or prospective worker, plus the worker's reasonable attorney fees and costs, and a court can enjoin the conduct. That exposure is why Colorado employers should confirm the salary threshold, trade-secret purpose, and notice steps before asking anyone to sign.
Yes. Section 8-2-113(3)(c) expressly permits a covenant not to compete that is part of the purchase and sale of a business or the assets of a business, and this exception does not depend on the salary threshold that applies to employees. A seller of a business can agree not to compete with the buyer within a reasonable scope tied to the sale. That is a different situation from an ordinary employee non-compete, which Colorado voids unless the highly-compensated exception is met.
No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force and its status has remained unsettled. Either way, Colorado's own statute, C.R.S. Section 8-2-113, governs non-competes in Colorado: void by default, allowed only for highly compensated workers to protect trade secrets and no broader than reasonably necessary.