CRS 8-2-113: Colorado Non-Compete Thresholds, Exceptions, and Remedies

Colorado non-compete law starts from a strong presumption against enforceability: under C.R.S. 8-2-113, any agreement restricting your right to earn a living with another employer is void unless it fits a narrow exception. The statute was rewritten by HB 22-1317 effective August 10, 2022, and amended again by SB 25-083 effective August 6, 2025. Whether you are a worker handed a non-compete to sign or an employer trying to protect legitimate interests, the exceptions, procedures, and penalties below determine what actually holds up.

The Default Rule

Most non-competes in Colorado are void. The statute reaches any agreement that restricts a worker’s right to work for another employer, and it does not matter whether the document is labeled a “non-compete.” If the practical effect is restricting where or for whom you can work after leaving a job, the law treats it as a covenant not to compete.¹ The ban covers employees and independent contractors alike.

From there, the question is whether the agreement fits one of the specific exceptions the statute allows.

Salary Thresholds for Enforceable Non-Competes

A traditional non-compete can be enforced only against a “highly compensated worker.” The Colorado Department of Labor and Employment sets that figure annually. For 2026, the threshold is $130,014 in annualized cash compensation.² Clearing the salary bar is necessary but not sufficient. The agreement must also be for the protection of trade secrets and no broader than reasonably necessary to serve that purpose.¹

Your compensation is tested at two separate moments: when you sign the agreement and when the employer tries to enforce it. If your pay sits below the threshold at either point, the non-compete is void. Annualized cash compensation includes gross salary, wages, fees, bonuses, and commissions. For workers employed less than a full year, the test is whether you would reasonably expect to earn above the threshold over a full calendar year.¹

The CDLE updates the dollar figure each year. By statute, the threshold cannot drop below where it stood on August 10, 2022.

Customer Non-Solicitation Agreements

A separate rule applies to agreements that prohibit you from soliciting your former employer’s customers. The compensation threshold for these covenants is set at 60 percent of the highly compensated worker figure. For 2026, that works out to $78,008.40.¹² The non-solicitation covenant still has to protect trade secrets and be no broader than reasonably necessary.

The two-point compensation test applies here too. If you earned $80,000 when you signed but your pay dropped to $75,000 before you left, the customer non-solicitation clause is void.

Confidentiality Provisions and Their Limits

Confidentiality and trade secret clauses are treated separately from non-competes and do not require the worker to meet any salary threshold. A reasonable confidentiality provision is allowed as long as it is relevant to the employer’s business.¹ But the statute draws firm lines around what a confidentiality agreement can and cannot cover. It cannot prohibit disclosure of:

General skills, training, experience, or expertise, whether gained on the job or elsewhere.
Information readily ascertainable to the public.
Information you have a right to disclose under whistleblower protections or other legal rights.

A confidentiality clause that functionally stops you from using your professional skills at a new job is a non-compete in disguise, and Colorado courts treat it as one. The clause has to target genuinely proprietary information, not your general ability to do your work.

Training Repayment Agreements

Employers can require you to repay the cost of specialized training if you leave within a defined period, but the statute keeps these agreements on a short leash. The training must be distinct from normal on-the-job instruction, and the repayment obligation is capped at the employer’s reasonable actual costs.¹

The amount owed must decrease proportionally over two years from the date you completed the training, based on how many months have passed. If the training cost $12,000 and you leave 12 months later, the maximum recoverable is $6,000. At 24 months, the obligation reaches zero. Public employers can use a longer paydown period.¹

Two additional constraints apply. The training must meet attorney general rules on transferability of any credentials you earn. And the repayment arrangement cannot violate the federal Fair Labor Standards Act or Colorado wage law. An employer who structures a repayment that effectively drops your pay below minimum wage has crossed the line. A separate carve-out allows scholarship repayment agreements for apprenticeship programs when a worker fails to meet the scholarship conditions.

Sale-of-Business Exception

Non-competes tied to the purchase and sale of a business, an ownership interest in a business, or substantially all of its assets remain enforceable.¹ If you sell your company and the buyer requires you to stay out of the same industry for a period, that restriction falls outside the general ban.

SB 25-083 added a new cap for minority owners. If you hold less than 50 percent of a business and received your stake as equity compensation or in connection with services you performed, the duration of a sale-related non-compete is limited by formula. Divide the total you received from the sale by your average annualized compensation from the business over the preceding two years, or your entire tenure if shorter. The result is the maximum number of years the non-compete can run.³ A $200,000 payout against $100,000 average annual compensation produces a two-year cap. The provision keeps buyers from locking service-provider minority stakeholders into disproportionately long restrictions.

Physicians, Dentists, and APRNs

Non-competes restricting a physician’s right to practice medicine are void. Other provisions in a physician’s employment or partnership agreement remain enforceable, including clauses requiring payment of damages related to competition so long as the damages are reasonably related to the injury the departure caused.¹ A former practice group can sue for financial damages tied to lost patients but cannot get a court order stopping the physician from practicing.

SB 25-083 expanded these protections. The highly compensated worker exception no longer applies to physicians, advanced practice registered nurses, or dentists; even a surgeon earning well above the threshold cannot be bound by a non-compete in Colorado.³ And agreements can no longer prevent or materially restrict a departing health-care provider from telling patients about their continuing practice, sharing new contact information, or informing patients of their right to choose a provider. Earlier law gave this disclosure right only to physicians treating rare disorders. SB 25-083 extended it to all health-care providers and all patients.

Required Written Notice

Even an agreement that satisfies every substantive requirement is still void if the employer mishandles notice. The timing depends on when the agreement is presented:¹

Prospective workers must receive the notice and full agreement terms before accepting the offer of employment.
Current workers must receive notice at least 14 days before the earlier of the covenant’s effective date or the effective date of any new compensation or changed employment terms that serve as consideration.

The notice itself has to be a separate document from the rest of the employment contract. It must be written in clear, conspicuous terms in the language you and your employer use to communicate about work. It must identify the agreement by name, state that the agreement contains a covenant that could restrict your future employment, and point to the specific sections containing the restriction. You must sign it.¹

Burying a non-compete in an offer letter or handbook and asking for a first-day signature violates every one of those requirements. Notice failures by themselves make the agreement unenforceable regardless of how well it was drafted on the merits.

Colorado Venue and Governing Law

If you primarily lived or worked in Colorado at the time your employment ended, your employer cannot force you to litigate enforceability in another state, and Colorado law governs the agreement regardless of what the contract says about choice of law.¹ A California or Delaware choice-of-law clause does not sidestep the state’s restrictions when the work happened in Colorado.

Penalties and Worker Remedies

Employers face exposure not just for enforcing a void non-compete but for presenting one in the first place. The statute makes it unlawful to enter into, offer as a condition of employment, or attempt to enforce any covenant the law voids.¹

An employer who violates the prohibition is liable for $5,000 per worker or prospective worker harmed, plus actual damages. Workers can recover reasonable costs and attorney fees in a private action. The attorney general can bring enforcement actions and seek injunctive relief, and where an employer has collected or tried to collect under an unlawful training repayment agreement, the attorney general can recover three times the amount involved.¹

A limited good-faith defense exists. If the employer shows the violation was made in good faith with reasonable grounds for believing the agreement was lawful, the court has discretion to reduce or eliminate the $5,000 penalty. That defense reaches only the statutory penalty; it does not shield the employer from actual damages or attorney fees.

1
Justia. Colorado Code 8-2-113 – Unlawful to Intimidate Worker – Agreement Not to Compete
2
Colorado Department of Labor and Employment. INFO 1 2026 COMPS and PAYCALC Orders
3
Colorado General Assembly. SB25-083 Limitations on Restrictive Employment Agreements