Colorado Noncompetes in 2026: Who Can Still Be Bound

By Michael P. Barry, LMB Partners

Colorado has one of the strictest noncompete laws in the country. For agreements entered into or renewed on or after August 10, 2022, a covenant that restricts a worker from competing after leaving a job is void unless it fits within a narrow exception. Many employers still use agreements written before that date, or forms borrowed from other states, and those agreements often will not hold up. With the 2026 compensation thresholds in effect and the 2027 figures due from the state soon, now is a good time to review what you have.

Who can still be bound

A noncompete is enforceable against an employee only if the employee is a highly compensated worker and the covenant exists to protect trade secrets. The restriction also can be no broader than reasonably necessary to protect the employer's legitimate interest in those trade secrets. For 2026, a highly compensated worker is one whose annualized cash compensation is at least $130,014.

A customer nonsolicitation agreement, which bars a former employee from soliciting the employer's customers, follows a lower threshold of 60 percent of that figure. For 2026, the customer nonsolicitation threshold is $78,008.40. The same trade secret requirement applies.

The employee must meet the threshold both when the agreement is signed and when the employer seeks to enforce it. An employee whose pay falls below the threshold by the time of separation may no longer be bound, even if the agreement was valid when signed.

Notice is a separate requirement

Meeting the compensation threshold is not enough. The employer must give the worker written notice of the covenant and its terms in a separate document, in clear and conspicuous language, signed by the worker. A prospective employee must receive the notice before accepting the offer of employment. A current employee must receive it at least 14 days before the earlier of the covenant's effective date or the effective date of any additional compensation or change in the terms of employment that provides consideration for the covenant. A covenant that is otherwise valid can fail for lack of proper notice.

What changed in 2025

Senate Bill 25 083 amended the statute for agreements entered into or renewed on or after August 6, 2025. Two changes matter most for our clients.

The first concerns the sale of a business. Colorado has long permitted a noncompete given by the seller of a business. Under the amendment, a minority owner who received the ownership interest as equity compensation or otherwise in exchange for services is subject to a cap. The noncompete may last no longer than the total consideration the owner received in the sale divided by the owner's average annualized cash compensation from the business over the two years before the sale, or over the owner's entire period of employment if shorter. An owner who receives $500,000 in a sale and averaged $250,000 a year in compensation can be bound for no more than two years. Majority owners are not subject to the cap.

The second concerns health care. Noncompetes and customer nonsolicitation agreements that restrict the practice of medicine, advanced practice registered nursing, dentistry or certified midwifery are now void regardless of the provider's compensation. Providers also may tell patients that they are leaving, where they are going and that the patient has the right to choose a provider.

The cost of getting it wrong

An employer that enters into, presents to a worker as a term of employment, or attempts to enforce a covenant it knew or reasonably should have known is void faces actual damages and a penalty of $5,000 per affected worker. An employer also may not require a worker who primarily resides and works in Colorado at the end of employment to litigate the covenant outside Colorado or under another state's law. Those rules apply to forms an employer simply keeps in its onboarding packet, so an outdated template is a real liability.

What employers should do now

Pull every noncompete and nonsolicitation agreement still in use and compare each one against the current thresholds. Confirm that each covenant is tied to identified trade secrets and is limited in time and geography. Confirm that a separate signed notice exists for every covered employee, and calendar a review for January, when the 2027 thresholds take effect. For a business sale, structure any seller noncompete with the minority owner cap in mind, particularly where key employees hold equity that they received as compensation.

Confidentiality agreements remain an important tool and are not subject to the compensation thresholds, as long as they do not restrict disclosure of general training, knowledge, skill or experience, information that is publicly available, or information the worker otherwise has a right to disclose. For many employees, a well drafted confidentiality agreement paired with a sound trade secret program now does more work than a noncompete.

If you would like us to review your agreements or the restrictive covenants in a pending sale, contact LMB Partners at 720.439.2530.

This article is provided for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney client relationship.