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April 25, 2022 HB 22-1317
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated March 28, 2022)
Drafting Number:
Prime Sponsors:
LLS 22-0956
Rep. Tipper
Sen. Bridges
Date:
Bill Status:
Fiscal Analyst:
April 25, 2022
Senate Business
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 revised fiscal note reflects the reengrossed bill.
Summary of Legislation
This bill creates a new factual basis for the existing class 2 misdemeanor offense of employee
intimidation by adding covenants not to compete to the basis. An exception to this is for a covenant
not to compete governing a person who, at the time the covenant not to compete is entered into and
at the time it is enforced, earns an amount of annualized cash compensation equivalent to or greater
than the threshold amount for highly compensated workers, if:
the covenant not to compete is for the protection of trade secrets; and
is no broader than is reasonably necessary to protect the employer's legitimate interest in
protecting trade secrets.
Additionally, if the employer provides proper notice, the following covenants not to compete are
allowable:
a provision providing for reasonable cost recovery for educating and training an employee where
the education or training is distinct from normal, on-the-job training;
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April 25, 2022 HB 22-1317
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 or information that a worker otherwise has a right to disclose as legally protected
conduct; and
a covenant for the purchase and sale of a business or its assets.
The bill prohibits an employer from entering into, presenting to a worker or prospective worker as a
term of employment, or attempting to enforce any 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, worker or
prospective worker, 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 class 2
misdemeanor offense of employee intimidation by adding covenants not to compete 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.
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April 25, 2022 HB 22-1317
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.
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 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.