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Three Basic Concepts Colorado Employers Need to Know About Employee Noncompetition Agreements

Three Basic Concepts Colorado Employers Need to Know about Employee Noncompetition Agreements

By Dan Block

1.  Noncompetition Agreements are not enforceable against Colorado employees except in four situations specified in the law.  One of those situations is when the employee’s job duties fit into a specified job category.

Based on Colorado court decisions:

2.  Continued employment of an “at will” employee IS sufficient consideration to make the Agreement enforceable—EXCEPT if the employer is acting in bad faith or possibly if the employee alleges that the agreement is unconscionable.  Thus, if the employer is requiring an existing employee to sign the agreement as a condition of continued employment, the Agreement is more likely to be enforceable if the employee is also given a raise or bonus in exchange for the employee signing the Agreement.

3.  The enforceability of the Agreement is based on the position held or to be held by the employee at the time the employee signs the Agreement, NOT when the employer seeks to enforce the Agreement.