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How Non-Compete Agreements Protect the Rights of Employers and Employees
Non-compete agreements protect legitimate business interests and company goodwill, even though courts often view them skeptically. They work for both sides of the employment relationship:
- Protecting trade secrets and confidential information. Disclosing a company's trade secrets is already prohibited by law, but a non-compete adds breach-of-contract liability on top of those penalties.
- Limiting otherwise lawful activity. Working for a competing business is not unlawful on its own, but a non-compete can restrict it within a defined scope and duration.
- Safeguarding employee rights through substantive law. Colorado law and general contract principles limit restrictive covenants that are indefinite, overbroad, or disconnected from a legitimate business interest.
- Operating under a presumption of invalidity in Colorado. Under Colorado's non-compete statute, CRS § 8-2-113, most restrictive covenants are presumptively void unless they fall within a defined statutory exception.
Whether you are drafting an agreement, reviewing one before signing, or responding to a covenant after a job change, our law firm can advise on whether the agreement meets the legal standards for enforcement in Colorado.
How Non-Compete Agreements Protect the Rights of Business Buyers in Colorado
When purchasing a business, the buyer acquires both physical assets and intangible assets such as intellectual property and trade secrets. A covenant not to compete is almost always a necessary part of the transaction:
- Protect intangible assets. The buyer pays for proprietary knowledge as part of the deal and should not face direct competition from the seller using that same knowledge.
- Structured as part of the deal documents. Such provisions appear either as a stand-alone document or as part of a merger and acquisition or purchase and sale agreement.
- Stay reasonable in scope. Restrictions tied to the sale of a business must be reasonable in duration and geographic scope.
- Operate under a different framework than employee non-competes. Sale-of-business covenants are not subject to the same statutory thresholds and may run up to five years when reasonable.
Buyers and sellers benefit from legal counsel that structures these provisions to withstand Colorado law while preserving the value of the transaction for both parties.
Our Non-Compete Legal Services in Colorado
Our non-compete attorney in Denver, CO, negotiates, drafts, reviews, and implements non-compete agreements that are reasonable in scope and duration, detailed, mutually agreeable, and enforceable. We also handle non-compete disputes in the event a covenant is breached.
Our Successful Cases
What Makes a Non-Compete Agreement Enforceable in Colorado
Colorado non-compete laws presume restrictive covenants are void. To be enforceable, an agreement must satisfy each of the following requirements:
Fit Within a Statutory Exception
C.R.S. § 8-2-113 permits non-compete agreements only in limited categories:
- Protection of trade secrets for highly compensated workers.
- Sale of a business or its assets.
- Recovery of training expenses for employees who leave in less than two years.
- Customer non-solicitation for workers earning at least 60% of the highly compensated threshold.
Protect a Legitimate Trade Secret
The agreement must protect trade secrets and be no broader than necessary. Under the Colorado Uniform Trade Secrets Act, trade secrets may include technical data, formulas, processes, confidential business information, or customer information if the business takes steps to keep them secret. General skills, ordinary job knowledge, and public information do not qualify.
Meet the Salary Threshold
For 2026, a worker must earn at least $130,014 for a trade-secret-based non-compete to be enforceable under Colorado’s 2026 PAY CALC Order. Customer non-solicitation provisions require at least 60% of that amount, or $78,008.40. These thresholds must be met both when the agreement is signed and when enforcement is sought.
Include Proper Written Notice
The employer must provide notice in a separate document, before the offer is accepted for new hires or at least 14 days before the agreement takes effect for current employees. A missing notice voids the agreement.
Stay Reasonable in Scope
Duration, geographic reach, and restricted activity must be reasonable and tied to the business interest being protected. A covenant that reaches too far beyond trade-secret protection, customer relationships, or the value of a business sale may be vulnerable under Colorado’s restrictive covenant statute.
Apply to a Covered Worker
As of August 2025, SB 25-083 further limits restrictive covenants for certain health-care providers, including medicine, advanced practice nursing, and dentistry. The rules also restrict provisions that limit patient notice about continued practice, new contact information, or provider choice.
Who We Assist
A Colorado non-compete attorney at Sequoia Legal assists clients on both sides of restrictive covenant matters. Our firm helps businesses protect trade secrets and customer relationships, reviews agreements for executives and employees, and supports buyers and sellers who need reasonable non-compete terms in business transactions.
- Employers: Draft, review, and implement non-compete, non-solicitation, confidentiality, and trade secret provisions.
- Employees: Review restrictive covenants before signing or after a job change.
- Executive and management personnel: Assess compensation thresholds, notice requirements, leverage points, and negotiation options.
- Buyers and sellers of businesses: Structure sale-of-business covenants that protect transaction value without exceeding Colorado law.
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