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August 1, 2022 HB 22-1317
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Final Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0956
Rep. Tipper
Sen. Bridges
Date:
Bill Status:
Fiscal Analyst:
August 1, 2022
Signed into Law
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 enacted 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. It creates certain exceptions, including
an exception for highly compensated workers where the covenant pertains to 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, the following covenants are permitted:
a provision for an employer’s recovery of education and training-related expenses that are
distinct from normal, on-the-job training;
a reasonable confidentiality provision relevant to the employer's business;
a covenant for the purchase and sale of a business or its assets; and
a provision requiring the repayment of a scholarship for an apprentice if the individual fails to
comply with the conditions of the scholarship agreement.
Notice and terms of the covenant not to compete must be provided to a prospective work, among
other provisions.
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August 1, 2022 HB 22-1317
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.
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.
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August 1, 2022 HB 22-1317
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 was signed into law by the Governor on June 8, 2022, and takes effect on August 9, 2022,
assuming no referendum petition is filed. It 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.