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March 28, 2022 HB 22-1317
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0956
Rep. Tipper
Date:
Bill Status:
Fiscal Analyst:
March 28, 2022
House Judiciary
Erin Reynolds | 303-866-4146
Erin.Reynolds@state.co.us
Bill Topic: RESTRICTIVE EMPLOYMENT AGREEMENTS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill prohibits certain restrictive post-employment agreements. It may increase
state revenue and state and local workload on an ongoing basis beginning in
FY 2022-23.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Summary of Legislation
Under current law, any covenant not to compete which restricts the right of any person to receive
compensation for performance of skilled or unskilled labor for any employer is prohibited, with
certain exceptions. The bill adds restrictive employment agreements to this prohibition and modifies
the exceptions. Employee intimidation related to post-employment agreements is subject to an
existing class 2 misdemeanor.
If proper notice of a restrictive employment agreement or covenant not to compete is provided by the
employer to the employee or prospective employee, the following agreements or covenants are not
prohibited:
a provision providing for recovery of education and training expenses for employees who have
served an employer for less than two 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. Page 2
March 28, 2022 HB 22-1317
The bill also 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.
Comparable Crime Analysis
Legislative Council Staff is required to include certain information in the fiscal note for any bill that
creates a new crime, changes the classification of an existing crime, or creates a new factual basis for
an existing crime. This section outlines data on crimes comparable to the offense in this bill and
discusses assumptions on future rates of criminal conviction for those offense.
Prior conviction data and assumptions. This bill creates a new factual basis for the existing offense
of employee intimidation by adding restrictive employment agreements to the basis. From FY 2018-19
to FY 2020-21, zero offenders have been sentenced and convicted for this offense; therefore, the fiscal
note assumes that there will continue to be minimal or no additional criminal case filings or
convictions for this offense under the bill. Because the bill is not expected to have a tangible impact
on criminal justice-related revenue or expenditures at the state or local levels, these potential impacts
are not discussed further in this fiscal note. Visit leg.colorado.gov/fiscalnotes for more information
about criminal justice costs in fiscal notes.
State Revenue
The bill may increase state revenue from fines on employers and court-related fees and fines. Any
impact is expected to be minimal. This revenue is subject to TABOR.
State Expenditures
The bill increases state workload in the Department of Labor and Employment (CDLE), the
Department of Law (DOL), the Department of Personnel and Administration (DPA), and the Judicial
Department.
Department of Labor and Employment. The bill gives the Division of Labor Standards and Statistics
authority to bring actions in court. Use of this authority is expected to happen on an as-needed basis,
and no change in appropriations is required.
Department of Law. The DOL will provide support to CDLE as needed. Additionally, the Attorney
General may bring actionable items to court. It is assumed that tips received for potential violations
of the Consumer Protection Act will be assessed and prioritized based on merit and available
resources. No change in appropriations is required.
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March 28, 2022 HB 22-1317
Department of Personnel and Administration. The department will review its existing policies to
ensure compliance with the bill. No change in appropriations is required.
Judicial Department. Trial court workload may increase as the Attorney General, CDLE, and any
employee may bring an action for injunctive relief and actual damages. It is anticipated the volume
of cases generated as a result of this proposed legislation will be minimal and can be handled within
existing resources.
Local Government
Similar to the state, workload will increase for local governments to review existing policies and
ensure compliance with the bill.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed, and applies to restrictive employment agreements or covenants not to
compete entered into or renewed on or after the applicable effective date of this act.
State and Local Government Contacts
Information Technology Judicial Labor
Law Personnel Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.