New legislation taking effect March 1, 2022 will see stricter enforcement of Colorado’s public policy against restrictive covenants. Colorado’s SB21-271 will impact enforcement efforts for violations of C.R.S. Section 8-2-113.

Existing law under C.R.S. §8-2-113 voids certain restrictive agreements such as noncompete and nonsolicitation agreements unless certain exceptions apply. Exceptions exist for a) purchase or sale of a business or its assets; b) protection of trade secrets; c) recovery of education or training expenses against employees with two or less years of employment; d) restriction on executive or management staff or personnel.

SB21-271 elevates any violation of C.R.S. §8-2-113 to a class 2 misdemeanor; punishable by up to 120 days in jail, a fine of up to $750, or both.

With little to no guidance on how this new enforcement tool will be used, or what constitutes a violation of the new bill, employers should be mindful that any number of actions associated with a restrictive agreement (e.g., requiring an employee to sign, attempting and/or threatening to enforce) could cause potential liability for violating the new statute. Before SB21-271 becomes effective, employers should review existing restrictive agreements to assure compliance with exceptions under C.R.S. §8-2-113.  

Members with questions about restrictive covenants should contact Western Growers.

[Teresa McQueen is corporate counsel for Western Growers.]

Source: Western Growers, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.