Second Regular Session
Seventy-third General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 22-0956.01 Yelana Love x2295
HOUSE BILL 22-1317
House Committees Senate Committees
Judiciary
A BILL FOR AN ACT
C
ONCERNING RESTRICTIVE EMPLOYMENT AGREEMENTS .101
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
The bill declares that a restrictive employment agreement or
covenant not to compete that restricts the right of any person to receive
compensation for performance of labor for any employer is void, with
certain exceptions.
Additionally, if the employer provides proper notice of the
restrictive employment agreement or covenant not to compete to the
employee or prospective employee, the following agreements or
covenants are not prohibited:
HOUSE SPONSORSHIP
Tipper,
SENATE SPONSORSHIP
(None),
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing statute.
Dashes through the words indicate deletions from existing statute. ! A provision providing for recovery of the expense of
educating and training an employee who has served an
employer for a period of less than 2 years, unless the
education and training was primarily for the benefit or
convenience of the employer;
! A reasonable confidentiality provision relevant to the
employer's business that does not prohibit disclosure of
information that arises from the employee's general
training, knowledge, skill, or experience, whether gained
on the job or otherwise, or information that is readily
ascertainable to the public; and
! Agreements or covenants with a person earning annual
cash compensation greater than the threshold amount for
highly compensated employees.
The bill limits choice of law and choice of venue provisions in
restrictive employment agreements and covenants not to compete.
The bill prohibits an employer from entering into, presenting to an
employee or prospective employee as a term of employment, or
attempting to enforce any restrictive employment agreement or covenant
not to compete that is void under the bill. An employer who violates this
provision is subject to a penalty of $5,000 for each employee or
prospective employee, injunctive relief, and actual damages.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, amend 8-2-113 as2
follows:3
8-2-113. Unlawful to intimidate employee - agreement not to4
compete - prohibition - exceptions - notice - definition. (1) (a) It shall
5
be IS unlawful to use force, threats, or other means of intimidation to6
prevent any person from engaging in any lawful occupation at any place7
he THE PERSON sees fit.8
(b) A
PERSON WHO VIOLATES THIS SUBSECTION (1) COMMITS A9
CLASS 2 MISDEMEANOR, AS DEFINED IN SECTION 18-1.3-501.10
(2) (a) E
XCEPT AS PROVIDED IN SUBSECTIONS (2)(b) AND (3) OF11
THIS SECTION, any RESTRICTIVE EMPLOYMENT AGREEMENT OR covenant12
not to compete which
THAT restricts the right of any person to receive13
HB22-1317-2- compensation for performance of skilled or unskilled labor for any1
employer shall be IS void. but this subsection (2) shall not apply to:2
(b) (I) T
HIS SUBSECTION (2) DOES NOT APPLY TO A RESTRICTIVE3
EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE GOVERNING4
A PERSON EARNING ANNUAL CASH COMPENSATION GREATER THAN THE5
THRESHOLD AMOUNT FOR HIGHLY COMPENSATED EMPLOYEES IF THE6
RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE : 7
(a)
(A) Any contract for IS PART OF AN AGREEMENT OR COVENANT8
FOR the purchase and sale of a business or the assets of a business; OR9
(b) (B) Any contract IS for the protection of trade secrets AND IS10
NARROWLY TAILORED TO PROTECT THE EMPLOYER 'S LEGITIMATE INTEREST11
IN PROTECTING TRADE SECRETS.12
(II) A
S USED IN THIS SUBSECTION (2)(b), "THRESHOLD AMOUNT13
FOR HIGHLY COMPENSATED EMPLOYEES " MEANS THE GREATER OF THE14
THRESHOLD AMOUNT FOR HIGHLY COMPENSATED EMPLOYEES AS15
DETERMINED BY THE DIVISION OF LABOR STANDARDS AND STATISTICS IN16
THE DEPARTMENT OF LABOR AND EMPLOYMENT :17
(A) A
S OF THE EFFECTIVE DATE OF THIS SECTION, AS AMENDED; OR18
(B) A
T THE TIME THE RESTRICTIVE EMPLOYMENT AGREEMENT OR19
COVENANT NOT TO COMPETE IS EXECUTED BY THE PARTIES .20
(c) Any contractual provision providing for recovery of the
21
expense of educating and training an employee who has served an22
employer for a period of less than two years;23
(d) Executive and management personnel and officers and24
employees who constitute professional staff to executive and management25
personnel.26
(3) T
HE FOLLOWING AGREEMENTS OR COVENANTS ARE NOT27
HB22-1317
-3- PROHIBITED BY SUBSECTION (2) OF THIS SECTION:1
(a) A
PROVISION PROVIDING FOR AN EMPLOYER 'S RECOVERY OF2
THE EXPENSE OF EDUCATING AND TRAINING AN EMPLOYEE WHO HAS3
SERVED AN EMPLOYER FOR A PERIOD OF LESS THAN TWO YEARS , UNLESS4
THE EDUCATION AND TRAINING WAS PRIMARILY FOR THE BENEFIT OR5
CONVENIENCE OF THE EMPLOYER ; AND6
(b) A
REASONABLE CONFIDENTIALITY PROVISION RELE VANT TO7
THE EMPLOYER'S BUSINESS THAT DOES NOT PROHIBIT DISCLOSURE OF8
INFORMATION THAT ARISES FROM THE EMPLOYEE 'S GENERAL TRAINING,9
KNOWLEDGE, SKILL, OR EXPERIENCE, WHETHER GAINED ON THE JOB OR10
OTHERWISE, OR INFORMATION THAT IS READILY ASCERTAINABLE TO THE11
PUBLIC.12
(4) (a) A
NY RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT13
NOT TO COMPETE THAT IS OTHERWISE PERMISSIBLE UNDER SUBSECTION (2)14
OR (3) OF THIS SECTION IS VOID UNLESS NOTICE OF THE RESTRICTIVE15
EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE AND THE16
TERMS OF THE RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT17
TO COMPETE ARE PROVIDED TO:18
(I) A
PROSPECTIVE EMPLOYEE BEFORE THE EMPLOYEE ACCEPTS19
THE EMPLOYER'S OFFER OF EMPLOYMENT; OR20
(II) A
CURRENT EMPLOYEE AT LEAST FOURTEEN DAYS BEFORE THE21
EARLIER OF:22
(A) T
HE EFFECTIVE DATE OF THE AGREEMENT OR COVENANT ; OR23
(B) T
HE EFFECTIVE DATE OF ANY ADDITIONAL COMPENSATION OR24
CHANGE IN THE TERMS OR CONDITIONS OF EMPLOYMENT THAT PROVIDES25
CONSIDERATION FOR THE AGREEMENT OR COVENANT .26
(b) A
N EMPLOYER SHALL PROVIDE THE NOTICE REQUIRED IN27
HB22-1317
-4- SUBSECTION (4)(a) OF THIS SECTION IN A SEPARATE DOCUMENT FROM ANY1
OTHER AGREEMENTS OR COVENANTS BETWEEN THE EMPLOYEE AND2
EMPLOYER AND IN CLEAR AND CONSPICUOUS TERMS IN THE LANGUAGE IN3
WHICH THE EMPLOYEE AND EMPLOYER COMMUNICATE ABOUT THE4
EMPLOYEE'S PERFORMANCE. THE NOTICE MUST BE SIGNED BY THE5
EMPLOYEE.6
(c) (I) A
N EMPLOYEE MAY REQUEST AN ADDITIONAL COPY OF THE7
RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE8
REQUIRED BY THIS SUBSECTION (4) ONCE EACH CALENDAR YEAR .9
(II) A
N EMPLOYER IS NOT REQUIRED UNDER THIS SUBSECTION (4)10
TO PROVIDE THE EMPLOYEE WITH AN ADDITIONAL COPY OF THE11
RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE12
MORE THAN ONCE DURING A CALENDAR YEAR .13
(3) (a)
(5) Any covenant not to compete provision of an14
employment, partnership, or corporate agreement between physicians that15
restricts the right of a physician to practice medicine, as defined in section16
12-240-107, upon termination of the agreement, is void; except that all17
other provisions of the agreement enforceable at law, including18
provisions that require the payment of damages in an amount that is19
reasonably related to the injury suffered by reason of termination of the20
agreement, are enforceable. Provisions of a covenant not to compete that21
require the payment of damages upon termination of the agreement may22
include damages related to competition.23
(b) Notwithstanding subsection (3)(a) of this section, after24
termination of an agreement described in subsection (3)(a) of this section,25
a physician may disclose his or her continuing practice of medicine and26
new professional contact information to any patient with a rare disorder,27
HB22-1317
-5- as defined in accordance with criteria developed by the National1
Organization for Rare Disorders, Inc., or a successor organization, to2
whom the physician was providing consultation or treatment before3
termination of the agreement. Neither the physician nor the physician's4
employer, if any, is liable to any party to the prior agreement for damages5
alleged to have resulted from the disclosure or from the physician's6
treatment of the patient after termination of the prior agreement.7
(4) A person who violates this section commits a class 28
misdemeanor.9
(6) (a) A
CHOICE OF LAW PROVISION THAT APPLIES TO A10
RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE11
IS PROHIBITED AND UNENFORCEABLE UNLESS IT REQUIRES THAT A DISPUTE12
ARISING UNDER THE RESTRICTIVE EMPLOYMENT AGREEMENT OR13
COVENANT NOT TO COMPETE BE GOVERNED BY THE LAW OF THE14
JURISDICTION WHERE THE EMPLOYEE PRIMARILY WORKS FOR THE15
EMPLOYER OR, IF THE WORK RELATIONSHIP HAS ENDED, THE JURISDICTION16
WHERE THE EMPLOYEE PRIMARILY WORKED AT THE TIME THE17
RELATIONSHIP ENDED.18
(b)
A CHOICE OF VENUE PROVISION THAT APPLIES TO A19
RESTRICTIVE EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE20
IS PROHIBITED AND UNENFORCEABLE UNLESS IT REQUIRES THAT A DISPUTE21
ARISING UNDER THE RESTRICTIVE EMPLOYMENT AGREEMENT OR22
COVENANT NOT TO COMPETE BE DECIDED IN A JURISDICTION WHERE :23
(I) T
HE EMPLOYEE PRIMARILY WORKS OR , IF THE WORK24
RELATIONSHIP HAS ENDED , A JURISDICTION WHERE THE EMPLOYEE25
PRIMARILY WORKED AT THE TIME THE RELATIONSHIP ENDED ; OR26
(II) T
HE EMPLOYEE RESIDES AT THE TIME OF THE DISPUTE .27
HB22-1317
-6- (7) AN EMPLOYEE WHO IS A PARTY TO A RESTRICTIVE1
EMPLOYMENT AGREEMENT OR A COVENANT NOT TO COMPETE , OR A2
SUBSEQUENT EMPLOYER THAT HAS HIRED OR IS CONSIDERING HIRING THE3
EMPLOYEE, MAY SEEK A DECLARATORY JUDGMENT FROM A COURT OF4
COMPETENT JURISDICTION OR AN ARBITRATOR THAT THE RESTRICTIVE5
EMPLOYMENT AGREEMENT OR COVENANT NOT TO COMPETE IS6
UNENFORCEABLE.7
(8) (a) A
N EMPLOYER SHALL NOT ENTER INTO , PRESENT TO AN8
EMPLOYEE OR PROSPECTIVE EMPLOYEE AS A TERM OF EMPLOYMENT , OR9
ATTEMPT TO ENFORCE ANY RESTRICTIVE EMPLOYMENT AGREEMENT OR10
COVENANT NOT TO COMPETE THAT IS VOID UNDER THIS SECTION .11
(b) A
N EMPLOYER THAT VIOLATES SUBSECTION (8)(a) OF THIS12
SECTION IS LIABLE FOR ACTUAL DAMAGES AND A PENALTY OF FIVE13
THOUSAND DOLLARS PER EMPLOYEE OR PROSPECTIVE EMPLOYEE HARMED14
BY THE CONDUCT. THE ATTORNEY GENERAL , THE DIRECTOR OF THE15
DIVISION OF LABOR STANDARDS AND STATISTICS , AND ANY EMPLOYEE OR16
PROSPECTIVE EMPLOYEE HARMED BY AN EMPLOYER 'S CONDUCT MAY17
BRING AN ACTION FOR INJUNCTIVE RELIEF AND TO RECOVER PENALTIES . IN18
ADDITION TO INJUNCTIVE RELIEF AND THE PENALTY ALLOWED IN THIS19
SUBSECTION (8)(b), AN EMPLOYEE OR PROSPECTIVE EMPLOYEE MAY20
RECOVER ACTUAL DAMAGES IN ANY PRIVATE ACTION BROUGHT UNDER21
THIS SECTION.22
SECTION 3. Act subject to petition - effective date -23
applicability. (1) This act takes effect at 12:01 a.m. on the day following24
the expiration of the ninety-day period after final adjournment of the25
general assembly; except that, if a referendum petition is filed pursuant26
to section 1 (3) of article V of the state constitution against this act or an27
HB22-1317
-7- item, section, or part of this act within such period, then the act, item,1
section, or part will not take effect unless approved by the people at the2
general election to be held in November 2022 and, in such case, will take3
effect on the date of the official declaration of the vote thereon by the4
governor.5
(2) This act applies to restrictive employment agreements or6
covenants not to compete entered into or renewed on or after the7
applicable effective date of this act.8
HB22-1317
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