Denver Non-Compete Agreements Lawyer
Non-compete agreements aim to prevent employers, contractors, and companies from engaging in certain competitive activities at the conclusion of a business relationship. As such, they are generally unenforceable in the state of Colorado. Employers who draft non-compete agreements must show that they meet the criteria for one of the three permitted exceptions. If you have been asked to sign a non-compete agreement that severely restricts your options after a period of employment, discuss the contract with a Denver non-compete agreements attorney before signing it.
What is a non-compete agreement?
Non-compete agreements are contracts which restrict employees and contractors from working for competing employers or starting competing businesses after their period of employment ends. These agreements typically discourage competition, a vital component of free trade. As a result, non-compete agreements may not be enforced in Colorado, with a few exceptions.
Non-compete Agreements Exemptions in Colorado
Colorado laws are hostile to non-compete agreements. Generally, these contracts are void unless they fit into a specific, exempt category. Enforceable non-compete agreements in Colorado must pertain to:
- The sale of a business
- Trade secrets
- Executives, management, and professional staff
A non-compete agreement which falls in one of the above categories must be reasonable and avoid being overly-restrictive to be enforceable.
The Sale of a Business
Colorado courts generally accept non-compete agreements pertaining to the buying or selling of a business. They recognize that the buyer of a business has a vested interest in the success of that business and must protect it from unfair competition by the seller, who has intimate knowledge of its operations and may undermine its success. A non-compete agreement for the sale of a business may prevent the seller from starting a new company and taking his old customers with him, rendering the buyer’s investment useless.
Protecting Trade Secrets
Colorado courts generally permit non-compete agreements that aim to protect trade secrets. To be enforceable, the non-compete agreement must be necessary to prevent the disclosure of trade secrets. Not all sensitive information a company deems to be private counts as a secret.
Trade secrets must meet specific criteria to qualify as such:
- The company must have taken measures to obtain or develop the information
- The company must have an interest in keeping the information from a competitor
- The information must relate to the business
- The information must be valuable to the business
- The owner has taken measures to maintain the secrecy of the information
If the information does not meet these strict requirements, the court may not consider it a trade secret.
Executives, Management, and Professional Staff
Enforceable non-compete agreements may limit the ability of executives, management, and the professionals who work for them from working for competitors. The trial court must determine whether an individual meets the criteria for any of these positions.
Colorado courts have indicated that an employee must have a significant responsibility for the business and act in a supervisory capacity for the court to recognize him or her as a manager or executive.
Additionally, the court looks at the following traits of a non-compete agreement when determining whether or not it is reasonable:
- The duration of the restriction
- The geographic scope of the restriction
- The extent of the restriction
Overly-restrictive non-compete agreements will not be enforced.
Steering Clear of Unfair Non-Compete Agreements in Denver
If you are unsure about the validity of a non-compete agreement, talk to a Denver non-compete agreements attorney before signing it. At Davidovich Law Firm, attorney Nathan Davidovich has over 55 years of experience advocating for employees. Call (303) 825-5529 or complete our contact form to schedule a consultation. We hold a 2015 Clients’ Choice Award for outstanding service and have a 100% Client Recommended Review on Martindale.com, the premier rating service for attorneys.