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Are non-compete agreements enforceable in Colorado?

After working as an employee in Broomfield for years, you have finally summoned up the courage to band together with a few fellow colleagues and form your own business. Yet as you are preparing to leave the office on your last day, your now former boss asks you what your plans are. After you inform him or her of your intentions, he or she politely yet in a matter-of-fact manner reminds you that you signed a non-compete agreement when you were initially hired. Does this now throw a wrench in your plans? 

Not necessarily. Many states have ruled that such agreements are not enforceable; fortunately for you, Colorado happens to be one of them. Section 8-2-113 of the state's Revised Statutes says that any contractual covenant prohibiting you from performing any skilled or unskilled labor for which you may be compensated is automatically considered to be void. The only exceptions to this rule are: 

  • Contracts regulating the sale of a business or certain business assets
  • Contracts meant to protect trade secrets
  • Contractual provisions that provide for the repayment of professional education and training
  • If you served as an executive or manager (or as a direct member of an executive or manager's professional staff)

Specifically in regards to the third exception, you have to have only worked for the company for less than two years in order for this exception to apply. 

Furthermore, the law prohibits your former employer from using threats or intimidating tactics in order for you and others to pursue a career in whatever field or capacity you see fit. Thus, it cannot use the threat of litigation in order to try and deter you from your new venture. 

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