Companies Beware - Colorado Continues its Assault on Restrictive Covenants

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Colorado enacted a restrictive covenant statute on March 1, 2022 that voided restrictive covenant agreements unless the agreements a) concerned the purchase and/ or sale of a business, b) were specifically designed to protect trade secrets, c) covered only “executive and management personnel,” or d) arose out of the recoupment of education and training expenses for employees that stayed with the company for less than two years. Unlike other states, Colorado also included criminal misdemeanors in its statute that made unenforceable restrictive covenant agreements punishable by a $750 fine or 120 days imprisonment (or both). Lastly, the March statute contained language announcing that it was “unlawful” in Colorado to use “means of intimidation” to prevent a person from engaging in a lawful occupation.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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