September 8, 2022

Colorado’s Restrictive Employment Agreement Act is Now Law

As discussed here, Colorado’s HB22-1317 – also known as the Restrictive Employment Agreements Act (REAA) – became effective August 10, 2022.

Placing significant limits on the enforceability of Colorado’s existing noncompetition and customer non-solicitation restrictions, the REAA removes preexisting management and executive personnel exceptions and modifies trade secrets exceptions so that they apply only to highly compensated employees (e.g., those earning $101,250 or more per year) if the noncompete is for the protection of trade secrets and is no broader than reasonably necessary to protect trade secrets. New notice requirements, expanded penalties, and restrictions about choice of law and venue are all now in effect. The REAA will not be enforced retroactively.

Employers should, if they not already, begin a review of existing restrictive covenant agreements and contract provisions for compliance. Current protocols and processes for presenting and discussing restrictive covenant documents should also be in place to be discussed with current and prospective workers. Significant penalties may be imposed for noncompliance. Employers are encouraged to consult legal counsel to ensure existing restrictive covenant agreements are amended in accordance with REAA mandates.