Colorado Noncompete Law: Rules, Exceptions, and Enforcement

Meta description: Learn how Colorado’s noncompete statute, C.R.S. § 8-2-113, limits noncompete and customer nonsolicitation agreements, including notice requirements, exceptions, and enforcement.

Colorado generally prohibits employers from using noncompete agreements to restrict workers’ future jobs. The state’s law, C.R.S. § 8-2-113, allows only narrow exceptions, and agreements that do not meet its requirements may be void. The rules also address customer nonsolicitation clauses, trade secrets, advance notice, and penalties for employers. Understanding how the statute works can help workers assess a restriction and help employers avoid costly compliance mistakes.

What Colorado’s Noncompete Statute Covers

Colorado’s noncompete law is part of the state’s employment statutes. It makes a covenant not to compete void unless the agreement fits a statutory exception. A typical noncompete clause tries to prevent a worker from joining a competitor, starting a competing business, or working in a particular field after leaving a job.

The statute also regulates certain customer nonsolicitation agreements. These clauses generally attempt to stop a former worker from soliciting the employer’s customers or clients. Colorado treats them differently from ordinary noncompetes, but they are not automatically enforceable: they must meet specific legal requirements as well.

The law does not eliminate every restriction related to employment. Confidentiality agreements, trade-secret protections, and some restrictions connected to the sale of a business may remain permissible. Their enforceability depends on their wording, purpose, the worker’s circumstances, and the statute in effect when the agreement was made or renewed.

When a Colorado Noncompete May Be Allowed

Colorado law recognizes limited exceptions. An agreement must fit an exception and satisfy the other applicable statutory conditions; an employer cannot make an otherwise prohibited clause enforceable simply by labeling it “reasonable” or calling it a confidentiality agreement.

Protection of trade secrets

A noncompete may be permitted when it is necessary to protect trade secrets and applies to a worker who meets the applicable compensation threshold. The restriction must be no broader than reasonably necessary to protect those secrets. A business’s general desire to prevent competition, retain customers, or avoid losing trained employees is not itself proof that a noncompete is needed.

Colorado’s Uniform Trade Secrets Act defines trade secrets by reference to information that has economic value from not being generally known or readily ascertainable and is subject to reasonable efforts to maintain its secrecy. Public information, ordinary professional skills, and general knowledge gained through work do not automatically qualify. Employers seeking this exception should be able to identify the information at issue and explain how the restriction protects it.

Sale of a business or ownership interest

A noncompete may be allowed in connection with the sale of a business, or of an ownership interest in a business, under the statutory exception. This recognizes that a buyer may need protection against the seller immediately restarting a competing business and undermining the value purchased. The exception is tied to the transaction; it is not a general route for imposing noncompetes on all employees.

Recovery of education and training expenses

Colorado permits certain agreements requiring repayment of the reasonable cost of educating and training a worker who has served the employer for less than two years. The law excludes customary, routine, and standard training, as well as training required by law or necessary for the job. Repayment terms must follow the statute, including its limits and conditions; an employer cannot use a repayment clause as a disguised penalty for changing jobs.

Executive and management personnel

The statute includes an exception for certain executive and management personnel and officers or employees who constitute professional staff to executive and management personnel. This exception is narrow and does not mean every supervisor, salaried employee, or worker with an important title may be bound by a noncompete. The compensation and other statutory requirements still matter.

Compensation Thresholds and Customer Nonsolicitation

Many exceptions depend on compensation. Colorado defines a “highly compensated employee” for this purpose by reference to a portion of the federal highly compensated employee threshold under Internal Revenue Code regulations. The Colorado Department of Labor and Employment publishes the applicable figures, which change over time.

For 2026, the Colorado threshold for a permissible noncompete is $127,091. The threshold for a permissible customer nonsolicitation agreement is 60% of that amount, or $76,255. These are annual compensation figures. Employers and workers should check the current CDLE notice rather than rely on an old agreement, online article, or prior year’s amount.

Meeting a threshold does not make a restriction automatically valid. The agreement must also satisfy the relevant exception, notice rules, and scope requirements. A customer nonsolicitation clause, for example, must be limited to customers with whom the worker had material contact and must be no broader than reasonably necessary to protect trade secrets.

Notice Requirements for Employers

Colorado’s notice rules are a critical part of enforceability. When an employer seeks to enter into a noncompete or customer nonsolicitation agreement that is not otherwise prohibited, it must provide the worker with a separate, clear, and conspicuous notice. The notice must be provided before the worker accepts the offer of employment or, for a current worker, at least 14 days before the effective date of the agreement or before the effective date of additional consideration for the agreement, as applicable.

The notice must be written in the language the worker uses to communicate with the employer and must be signed by the worker. It must identify the agreement and explain that it could restrict the worker’s future employment options. A copy of the agreement must be provided with the notice. Notice obligations also apply in specified situations involving workers whose primary work location is Colorado or who are employed by an employer in Colorado.

Notice is not a formality that cures an unlawful restriction. If the clause does not meet a statutory exception, proper notice cannot make it valid. Conversely, employers may risk penalties and other consequences if they fail to provide required notice for an agreement that otherwise could qualify.

Which Version of the Law Applies?

Colorado amended its noncompete statute through legislation enacted in 2022 and 2026. The 2022 changes substantially narrowed the circumstances in which employment noncompetes and customer nonsolicitation agreements can be used and established enhanced notice requirements. The 2026 changes further addressed issues including choice of law and forum provisions for workers who primarily reside or work in Colorado.

As a general rule, the 2026 amendments apply to agreements entered into or renewed on or after the law’s effective date, August 6, 2026. Earlier agreements may be evaluated under the version of the statute applicable when they were made, though later changes or renewals can affect the analysis. The details can depend on the agreement, the worker’s location, and the specific statutory provision. A dated agreement should therefore be reviewed against the law in effect at the relevant time.

Colorado law also limits attempts to sidestep its protections through contract drafting. For covered workers, an employer generally cannot use a choice-of-law clause or forum-selection clause to deprive them of Colorado’s statutory protections or require them to litigate a covered dispute outside Colorado. The law’s application can turn on where the worker primarily resides and works, not merely on the employer’s headquarters or the contract’s chosen state.

Confidentiality Agreements and Trade Secrets

A confidentiality agreement is not necessarily a noncompete. Employers may generally protect legitimate confidential information and trade secrets, but the clause cannot prohibit a worker from using general knowledge, skills, or experience acquired during employment. Nor should it prevent lawful discussion of workplace concerns or disclosure that is protected by law.

Colorado’s statute contains protections for certain disclosures, including information about alleged criminal conduct, discrimination, or workplace violations, subject to applicable legal conditions. An agreement that broadly bars disclosure of any information about the employer may raise issues beyond noncompete law, including whistleblower, labor, and discrimination protections.

Employers can reduce risk by defining confidential information carefully, excluding publicly available or independently developed material, and avoiding language that appears to bar ordinary competition. Workers reviewing an agreement should distinguish restrictions on use or disclosure of protected information from restrictions on taking a job with a competitor.

Enforcement, Penalties, and Legal Remedies

A worker can challenge an allegedly unlawful restriction in court or raise the issue in an employment dispute. Colorado law allows workers to seek appropriate relief, including injunctive relief and actual damages where available. Employers may also face a statutory penalty of $5,000 per worker or prospective worker for each violation, subject to the statute’s terms, as well as other potential liabilities and legal costs.

Enforcement is not limited to whether a worker signed the agreement. A court may examine the clause’s purpose, the worker’s compensation, the trade secrets involved, the scope and duration of the restriction, the notice given, and whether the agreement is governed by an earlier or later version of the law. A sweeping restriction may be vulnerable even if the employer has a legitimate interest in protecting confidential information.

Employers should not assume that a court will rewrite an unlawful clause into a valid one. Colorado’s statute makes prohibited covenants void, and the availability of modification may depend on the issue and the circumstances. A careful review before an agreement is issued is safer than relying on a court to narrow it after a dispute begins.

Practical Steps for Workers and Employers

For workers reviewing an agreement

• Identify the restriction. Determine whether the document limits future employment, customer contact, information use, or repayment of training costs.
• Check the dates. Note when the agreement was signed, renewed, or changed and compare those dates with statutory amendments.
• Review compensation and location. The relevant annual threshold, work location, and residence may affect the analysis.
• Look for notice. Check whether a separate notice was provided on time, in the required language, and with a copy of the agreement.
• Preserve records. Keep the contract, offer materials, notices, and communications about the restriction.

For employers drafting agreements

• Use restrictions sparingly. Consider confidentiality, access controls, and trade-secret safeguards before using a noncompete.
• Confirm eligibility. Verify the current compensation threshold and the specific statutory exception before issuing a restriction.
• Tailor the scope. Define protected trade secrets and limit restrictions to what is reasonably necessary.
• Document notice. Retain proof of delivery, the signed notice, the agreement, and the worker’s relevant location and compensation information.
• Review changes. Reassess agreements when a worker’s role changes, an agreement is renewed, or Colorado law is amended.

Because the law is fact-specific and changes over time, this article provides general information, not legal advice. Workers and employers facing a dispute or preparing an agreement may wish to consult a Colorado employment attorney.

Authoritative Sources

• Colorado House Bill 24-1324, Restrictive Employment Agreements
• Colorado Department of Labor and Employment: Noncompete Agreements
• Colorado House Bill 22-1317, Restrictive Employment Agreements
• Colorado Revised Statutes § 8-2-113
• Colorado Revised Statutes § 8-2-113, 2023 version