Jessica JohnsonBefore August 2022, Colorado courts routinely evaluated non-compete agreements under a "reasonableness" standard — a clause limiting a departing sales manager to a one-year restriction in a five-state region might survive if a court found it proportionate to the employer's business interest. After House Bill 22-1317 took effect on August 10, 2022, that framework was replaced almost entirely. Colorado's non-compete statute is now one of the most employer-restrictive in the country. A clause that would have been enforceable in 2021 is void in 2026 — and the employer who tries to enforce it faces $5,000 in fines plus criminal misdemeanor exposure. This comparison walks through what changed, what remains, and what employers and employees should know in 2026.
How Non-Compete Law Worked in Colorado Before 2022
Under the pre-2022 framework, codified in an earlier version of C.R.S. § 8-2-113, non-compete agreements in Colorado were void as a general rule — but four exceptions allowed enforcement when the employer could demonstrate a legitimate interest:
- Trade secret protection: The non-compete was necessary to protect actual trade secrets, not just general confidential information.
- Executive and management personnel: The employee held a management role with meaningful authority (hiring, firing, directing the work of others).
- Sale of a business: The non-compete accompanied the sale of the business's goodwill.
- Professional training cost recovery: The employer sought to recover extraordinary, specific training costs.
In practice, Colorado courts applied a "blue penciling" doctrine — if a clause was overbroad in time or geography, judges would reduce it to a reasonable scope rather than void it entirely. An employer in the wrong could still win a modified injunction. Employees had limited recourse if they signed a clause unknowingly as part of an offer letter. No statute mandated advance notice or separate-document disclosure.
The baseline in 2021: An HR manager earning $90,000 per year with access to client lists could be validly bound to a 12-month, statewide non-compete if the employer could characterize the client list as a trade secret and the role as "management."
How Non-Compete Law Works in Colorado After HB22-1317 (2022–Present)
The 2022 reform rewrote C.R.S. § 8-2-113 substantially. The same general void rule applies, but the exceptions were restructured and conditioned on salary thresholds, advance notice, and substantive limitations:
New Salary Thresholds (Updated Annually)
Non-compete agreements are now enforceable only if the employee's earnings exceed a statutory threshold. For 2026:
| Agreement Type | Annual Salary Threshold (approx. 2026) | Notes |
|---|---|---|
| Non-compete clause | ~$123,750/year | 120% of Colorado average weekly wage × 52 |
| Non-solicitation of customers | ~$74,250/year | 60% of Colorado average weekly wage × 52 |
| Non-solicitation of employees | Same as above | ~$74,250/year |
Below these thresholds, the agreement is void — and the employer commits a violation by attempting to enforce it.
Mandatory Pre-Employment Notice
Before 2022, there was no statutory notice requirement. Now, employers must:
- Provide the non-compete agreement on a separate document (not buried in the offer letter)
- Disclose the agreement before the prospective employee accepts the offer — or for existing employees, at least 14 days before the agreement takes effect
Giving the agreement on day one of work, or slipping it into an onboarding packet after acceptance, violates the notice requirement and renders the agreement void.
No More Blue Penciling
Post-2022 Colorado courts will not reduce an overbroad non-compete to a lawful scope. If the clause exceeds what the statute permits, the whole clause is void. Employers cannot over-draft and rely on courts to salvage a reasonable portion.
Choice of Law Codified
The reform clarified that if an employee resides or primarily works in Colorado, Colorado law governs — regardless of what state the contract designates. This closes the practice of employers using contracts governed by Texas or Georgia law (states with more employer-friendly non-compete regimes) against Colorado-based workers.
Before vs. After: The Key Changes at a Glance
| Element | Pre-2022 | Post-HB22-1317 (2026) |
|---|---|---|
| General rule | Void unless exception applies | Void unless exception applies |
| Salary threshold | None | ~$123,750/yr for non-compete; ~$74,250/yr for non-solicitation |
| Notice requirement | None | Must be on separate doc, before job offer accepted |
| Court modification ("blue penciling") | Allowed | Prohibited — overbroad = void |
| Choice of law | Contractual (employer chose) | Colorado law applies if employee works in Colorado |
| Employer penalty | None statutory | $5,000/violation/employee + attorney's fees |
| Criminal liability | None | Misdemeanor for attempting to enforce void agreement |
| Customer non-solicitation threshold | None | ~$74,250/yr |
| Protected scope | Reasonableness standard | Must be "no broader than reasonably necessary" |
À retenir: The most consequential change is not the salary threshold — it's the elimination of blue penciling and the introduction of employer penalties. Pre-2022, overbroad clauses created a negotiating chip. Post-2022, they create liability.
What Hasn't Changed: Still-Valid Grounds for Non-Compete Enforcement
Despite the reform's restrictive posture, four grounds for enforcement remain — now with stricter conditions:
- Trade secret protection: Must protect an identifiable, actual trade secret, not general business knowledge. The non-compete must be no broader than necessary.
- Executive and management personnel: Must have primary management duty, regularly direct two or more full-time equivalent employees, and have authority to hire or fire.
- Sale of a business: The clause must accompany a genuine transfer of business goodwill.
- Recovery of training costs: Limited to specific, documented training costs — not general onboarding or standard professional development.
All four still require the salary threshold to be met AND proper advance notice to have been given.
What Employers Should Use Instead
For employees below the salary threshold — and increasingly for those above it — employers have shifted to alternative protections:
- Confidentiality and NDA agreements: These remain broadly enforceable in Colorado, without salary thresholds or notice requirements. They protect genuine trade secrets without restricting where the employee can work.
- Non-solicitation of customers: Enforceable above the lower threshold (~$74,250/yr), but must be limited to customers the employee actually served in the prior two years.
- Garden leave clauses: The employee remains on payroll but does not work during a notice period, giving the employer time to protect client relationships without an unenforceable post-employment restriction.
The information in this article is provided for educational purposes and does not constitute legal advice. Colorado non-compete law is complex and evolves annually with threshold adjustments. Consult a licensed Colorado employment attorney before drafting, signing, or attempting to enforce any restrictive covenant.
Frequently Asked Questions About Colorado Non-Compete Agreements in 2026
I signed a non-compete in 2020. Does HB22-1317 retroactively void it? Colorado courts have generally applied the 2022 law prospectively — meaning it governs agreements made after August 10, 2022, but courts may still use the new standards to evaluate whether an older agreement was ever enforceable under pre-existing law. If you signed before 2022 and your employer attempts to enforce it today, consult an attorney immediately. The new penalty structure does apply to enforcement attempts made after the law's effective date.
My employer is in Texas but I work remotely from Denver. Does Colorado law apply? Yes. The 2022 reform codified that Colorado law governs any non-compete where the employee primarily resides or works in Colorado, regardless of the contract's choice-of-law provision. A Texas-governed clause in a Denver-based remote worker's contract is unenforceable to the extent it would be void under Colorado law.
What counts as "attempting to enforce" a void non-compete — and triggers the $5,000 penalty? The CDLE and courts have interpreted this broadly: sending a cease-and-desist letter, filing a lawsuit, threatening litigation, or informing a subsequent employer of the clause all constitute enforcement attempts. Even a demand letter from an attorney triggers the penalty provision.
Can I waive my rights under Colorado non-compete law? No. C.R.S. § 8-2-113 explicitly states that any agreement purporting to waive these protections is void as against public policy. An employee cannot contract away the statute's protections — even voluntarily.
