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The most important thing to know about non-competition agreements between employers and employees is this: most of them are not enforceable. The Colorado Legislature simply has concluded that it is bad public policy to restrict where people can work.
Nevertheless, there are four instances in which non-competition agreements are valid:
- A contract for the purchase and sale of a business or its assets.
- A contract for the protection of trade secrets.
- A contract provision allowing for recovery of the expense of training and educating an employee who has worked for an employer for less than two years. This is considered to be a very limited provision. In fact, one higher court said that it’s not enforceable unless the contract contained a provision requiring the employee to reimburse the employer for training expenses.
- Agreements with executive and management personnel and other officers and employees who are professional staff to executive and management personnel. C.R.S. 8-2-113(2)(a) to (d). Remember, though, that worker are not executive or management personnel simply because that’s what the employer calls them. In fact, the standard for proving that someone is at the executive or management level is high.