Colorado 2025 Regular Session

Colorado Senate Bill SB083 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		First Regular Session
2	2		Seventy-fifth General Assembly
3	3		STATE OF COLORADO
4		-	~~REREVISED~~
5		-	This Version Includes All Amendments
6		-	~~Adopted~~ in the Second House
	4	+	REVISED
	5	+	This Version Includes All Amendments Adopted
	6	+	on Second Reading in the Second House
7	7		LLS NO. 25-0275.01 Josh Schultz x5486
8	8		SENATE BILL 25-083
9	9		Senate Committees House Committees
10	10		Business, Labor, & Technology Business Affairs & Labor
11	11		A BILL FOR AN ACT
12	12		C
13	13		ONCERNING LIMITATIONS ON RESTRICTIVE EMPLOYMENT101
14	14		AGREEMENTS.102
15	15		Bill Summary
16	16		(Note: This summary applies to this bill as introduced and does
17	17		not reflect any amendments that may be subsequently adopted. If this bill
18	18		passes third reading in the house of introduction, a bill summary that
19	19		applies to the reengrossed version of this bill will be available at
20	20		http://leg.colorado.gov.)
21	21		Under current law, there is an exemption from the general
22	22		prohibition against covenants not to compete. The exemption allows for
23	23		a covenant not to compete under specified conditions governing an
24	24		individual who earns an amount of annualized cash compensation
25	25		equivalent to or greater than the threshold amount for highly compensated
26	26		HOUSE
27		-	3rd Reading Unamended
28		-	April 14, 2025
29		-	HOUSE
30	27		Amended 2nd Reading
31	28		April 11, 2025
32	29		SENATE
33	30		3rd Reading Unamended
34	31		March 12, 2025
35	32		SENATE
36	33		Amended 2nd Reading
37	34		March 11, 2025
38	35		SENATE SPONSORSHIP
39		-	Daugherty and Frizell, Bridges, Coleman, Cutter, Jodeh, Kipp, Snyder, Weissman, ~~Winter~~
40		-	F.
	36	+	Daugherty and Frizell, Bridges, Coleman, Cutter, Jodeh, Kipp, Snyder, Weissman,
	37	+	Winter F.
41	38		HOUSE SPONSORSHIP
42		-	Brown and Garcia Sander, ~~Boesenecker, Clifford, Lieder~~
	39	+	Brown and Garcia Sander,
43	40		Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
44	41		Capital letters or bold & italic numbers indicate new material to be added to existing law.
45	42		Dashes through the words or numbers indicate deletions from existing law. workers. The bill excludes from the highly compensated worker
46	43		exemption a covenant not to compete that restricts the practice of
47	44		medicine, the practice of advanced practice registered nursing, or the
48	45		practice of dentistry in this state.
49	46		Under current law, there is also an exemption from the general
50	47		prohibition against covenants not to solicit customers (nonsolicitation
51	48		covenant) that allows for a nonsolicitation covenant governing an
52	49		individual who earns an amount of annualized cash compensation
53	50		equivalent to or greater than 60% of the threshold amount for highly
54	51		compensated workers if the nonsolicitation covenant is no broader than
55	52		reasonably necessary to protect the employer's legitimate interest in
56	53		protecting trade secrets. The bill also excludes from the highly
57	54		compensated worker exemption for nonsolicitation covenants a covenant
58	55		not to compete that restricts the practice of medicine, the practice of
59	56		advanced practice registered nursing, or the practice of dentistry.
60	57		A covenant not to compete governing an individual who has a
61	58		minority ownership share of a business and who received their ownership
62	59		share in the business as equity compensation or otherwise in connection
63	60		with services rendered is permissible if the covenant's duration in years
64	61		does not exceed a number calculated by the total consideration received
65	62		by the individual from the sale divided by the average annualized cash
66	63		compensation received by the individual from the business, including
67	64		income received on account of the individual's ownership interest during
68	65		the preceding 2 years or during the period of time that the individual was
69	66		affiliated with the business, whichever period of time is shorter.
70	67		The bill prohibits a covenant that prevents or materially restricts
71	68		a health-care provider from disclosing to a patient to whom the
72	69		health-care provider was providing consultation or treatment before the
73	70		health-care provider's departure from a medical practice the following
74	71		information:
75	72		! The health-care provider's continuing practice of medicine;
76	73		! The health-care provider's new professional contact
77	74		information; or
78	75		! The patient's right to choose a medical provider.
79	76		Be it enacted by the General Assembly of the State of Colorado:1
80	77		SECTION 1. In Colorado Revised Statutes, 8-2-113, amend2
81	78		(2)(a), (2)(b), (2)(c) introductory portion, (2)(c)(I), (2)(d), (3)(b), (3)(c),
82	79		3
83	80		(5), and (9)(a); and add (2)(c)(I.3), (2)(c)(I.4), (2)(c)(I.5), (2)(c)(I.6),4
84	81		083-2- (2)(c)(I.7), and (5.5) as follows:1
85	82		8-2-113. Unlawful to intimidate worker - agreement not to2
86	83		compete - prohibition - exceptions - notice - rules - definitions.3
87	84		(2) (a) Except as provided in subsections (2)(b), (2)(d), and (3) of this4
88	85		section, any A covenant not to compete that restricts the right of any5
89	86		person AN INDIVIDUAL to receive compensation for performance of labor6
90	87		for any employer is void.7
91	88		(b) E
92	89		XCEPT FOR A COVENANT NOT TO COMPETE THAT RESTRICTS8
93	90		THE PRACTICE OF MEDICINE , THE PRACTICE OF ADVANCED PRACTICE9
94	91		REGISTERED NURSING, OR THE PRACTICE OF DENTISTRY IN THIS STATE, this10
95	92		subsection (2) does not apply to a covenant not to compete governing a
96	93		11
97	94		person AN INDIVIDUAL who, at the time the covenant not to compete is12
98	95		entered into and at the time it is enforced, earns an amount of annualized13
99	96		cash compensation equivalent to or greater than the threshold amount for14
100	97		highly compensated workers, if the covenant not to compete is for the15
101	98		protection of trade secrets and is no broader than is reasonably necessary16
102	99		to protect the employer's legitimate interest in protecting trade secrets.17
103	100		(c) As used in this subsection (2) SECTION, UNLESS THE CONTEXT18
104	101		OTHERWISE REQUIRES:19
105	102		(I) "Annualized cash compensation" means:20
106	103		(A) The amount of the gross salary or wage amount, the fee21
107	104		amount, or the other compensation amount for the full year, if the person22
108	105		INDIVIDUAL was employed or engaged for a full year; OR23
109	106		(B) The compensation that the person INDIVIDUAL would have24
110	107		earned, based on the worker's gross salary or wage amount, fee, or other25
111	108		compensation if the worker was not employed or engaged for a full year.26
112	109		(I.3) "H
113	110		EALTH-CARE PROVIDER" MEANS AN INDIVIDUAL LICENSED27
114	111		083
115	112		-3- TO ENGAGE IN THE PRACTICE OF MEDICINE, REGISTERED TO ENGAGE IN THE1
116	113		PRACTICE OF ADVANCED PRACTICE REGISTERED NURSING , LICENSED TO2
117	114		PRACTICE AS A CERTIFIED MIDWIFE , OR LICENSED TO ENGAGE IN THE3
118	115		PRACTICE OF DENTISTRY.4
119	116		(I.4) "P
120	117		RACTICE AS A CERTIFIED MIDWIFE" HAS THE MEANING SET
121	118		5
122	119		FORTH IN SECTION 12-255-104 (7.5).6
123	120		(I.5) "P
124	121		RACTICE OF ADVANCED PRACTICE REGISTERED NURSING "7
125	122		HAS THE MEANING SET FORTH IN SECTION 12-255-104 (8).8
126	123		(I.6) "P
127	124		RACTICE OF DENTISTRY" HAS THE SAME MEANING AS9
128	125		"
129	126		DENTISTRY" SET FORTH IN SECTION 12-220-104 (6).10
130	127		(I.7) "P
131	128		RACTICE OF MEDICINE" HAS THE MEANING SET FORTH IN11
132	129		SECTION 12-240-107 (1) AND INCLUDES PRACTICE AS A PHYSICIAN12
133	130		ASSISTANT PURSUANT TO SECTION 12-240-113.13
134	131		(d) E
135	132		XCEPT FOR A COVENANT NOT TO COMPETE THAT RESTRICTS14
136	133		THE PRACTICE OF MEDICINE, THE PRACTICE OF ADVANCED PRACTICE15
137	134		REGISTERED NURSING, OR THE PRACTICE OF DENTISTRY IN THIS STATE, this16
138	135		subsection (2) does not apply to a covenant not to solicit customers17
139	136		governing a person
140	137		AN INDIVIDUAL who, at the time the covenant is18
141	138		entered into and at the time it is enforced, earns an amount of annualized19
142	139		cash compensation equivalent to or greater than sixty percent of the20
143	140		threshold amount for highly compensated workers, if the nonsolicitation21
144	141		covenant is no broader than reasonably necessary to protect the22
145	142		employer's legitimate interest in protecting trade secrets.23
146	143		(3) The following covenants are not prohibited by subsection (2)24
147	144		of this section:25
148	145		(b) A reasonable confidentiality provision
149	146		OR TRADE SECRET
150	147		26
151	148		PROVISION relevant to the employer's business that does not prohibit27
152	149		083
153	150		-4- disclosure of information that arises from the worker's general training,1
154	151		knowledge, skill, or experience, whether gained on the job or otherwise,2
155	152		information that is readily ascertainable to the public, or information that3
156	153		a worker otherwise has a right to disclose as legally protected conduct;4
157	154		(c) A covenant for the purchase and sale of a business or the5
158	155		assets of a business; or NOT TO COMPETE RELATED TO THE PURCHASE AND6
159	156		SALE OF A BUSINESS, A DIRECT OR INDIRECT OWNERSHIP SHARE IN A7
160	157		BUSINESS, OR ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF A BUSINESS8
161	158		THAT RESTRICTS COMPETITION BY AN OWNER OF AN INTEREST IN THE9
162	159		BUSINESS. FOR AN INDIVIDUAL WHO OWNS A MINORITY OWNERSHIP SHARE10
163	160		OF THE BUSINESS AND WHO RECEIVED THEIR OWNERSHIP SHARE IN THE11
164	161		BUSINESS AS EQUITY COMPENSATION OR OTHERWISE IN CONNECTION WITH12
165	162		SERVICES RENDERED, THE DURATION IN YEARS OF A COVENANT NOT TO13
166	163		COMPETE DESCRIBED IN THIS SUBSECTION (3)(c) MUST NOT EXCEED A14
167	164		NUMBER CALCULATED BY THE TOTAL CONSIDERATION RECEIVED BY THE15
168	165		INDIVIDUAL FROM THE SALE DIVIDED BY THE AVERAGE ANNUALIZED CASH16
169	166		COMPENSATION RECEIVED BY THE INDIVIDUAL FROM THE BUSINESS ,17
170	167		INCLUDING INCOME RECEIVED ON ACCOUNT OF THEIR OWNERSHIP18
171	168		INTEREST DURING THE PRECEDING TWO YEARS OR DURING THE PERIOD OF19
172	169		TIME THAT THE INDIVIDUAL WAS AFFILIATED WITH THE BUSINESS ,20
173	170		WHICHEVER PERIOD OF TIME IS SHORTER.21
174	171		22
175	172		(5) (a) Any covenant not to compete provision of an employment,23
176	173		partnership, or corporate agreement between physicians that restricts the24
177	174		right of a physician to practice medicine, as defined in section25
178	175		12-240-107, upon termination of the agreement, is void; except that all26
179	176		other provisions of the agreement enforceable at law, including27
180	177		083
181	178		-5- provisions that require the payment of damages in an amount that is1
182	179		reasonably related to the injury suffered by reason of termination of the2
183	180		agreement, are enforceable. Provisions of a covenant not to compete that3
184	181		require the payment of damages upon termination of the agreement may4
185	182		include damages related to competition. A PROVISION OF AN EMPLOYMENT5
186	183		AGREEMENT OR ANY OTHER AGREEMENT ENFORCEABLE AT LAW THAT6
187	184		DOES NOT INCLUDE AN UNLAWFUL RESTRICTIVE COVENANT REMAINS7
188	185		ENFORCEABLE AND SUBJECT TO ANY DAMAGES OR EQUITABLE REMEDY8
189	186		OTHERWISE AVAILABLE AT LAW.9
190	187		(b) Notwithstanding subsection (5)(a) of this section, after10
191	188		termination of an agreement described in subsection (5)(a) of this section,11
192	189		a physician may disclose his or her continuing practice of medicine and12
193	190		new professional contact information to any patient with a rare disorder,13
194	191		as defined in accordance with criteria developed by the National14
195	192		Organization for Rare Disorders, Inc., or a successor organization, to15
196	193		whom the physician was providing consultation or treatment before16
197	194		termination of the agreement. Neither the physician nor the physician's17
198	195		employer, if any, is liable to any party to the prior agreement for damages18
199	196		alleged to have resulted from the disclosure or from the physician's19
200	197		treatment of the patient after termination of the prior agreement.20
201	198		(5.5) A
202	199		COVENANT IS DEEMED A COVENANT THAT RESTRICTS THE21
203	200		PRACTICE OF MEDICINE , THE PRACTICE OF ADVANCED PRACTICE22
204	201		REGISTERED NURSING, OR THE PRACTICE OF DENTISTRY IF IT PROHIBITS OR23
205	202		MATERIALLY RESTRICTS A HEALTH -CARE PROVIDER FROM DISCLOSING TO24
206	203		A PATIENT TO WHOM THE HEALTH -CARE PROVIDER WAS PROVIDING25
207	204		CONSULTATION OR TREATMENT BEFORE THE HEALTH -CARE PROVIDER'S26
208	205		DEPARTURE FROM A MEDICAL OR DENTAL PRACTICE THE FOLLOWING27
209	206		083
210	207		-6- INFORMATION:1
211	208		(a) T
212	209		HE HEALTH-CARE PROVIDER'S CONTINUING PRACTICE OF2
213	210		MEDICINE;3
214	211		(b) T
215	212		HE HEALTH-CARE PROVIDER'S NEW PROFESSIONAL CONTACT4
216	213		INFORMATION; OR5
217	214		(c) T
218	215		HE PATIENT'S RIGHT TO CHOOSE A HEALTH-CARE PROVIDER.6
219	216		(9) (a) The attorney general may enforce subsections (2), (3), (4),7
220	217		(5.5), (6), and (8)(a) of this section.8
221	218		SECTION 2. Act subject to petition - effective date -9
222	219		applicability. (1) This act takes effect at 12:01 a.m. on the day following10
223	220		the expiration of the ninety-day period after final adjournment of the11
224	221		general assembly; except that, if a referendum petition is filed pursuant12
225	222		to section 1 (3) of article V of the state constitution against this act or an13
226	223		item, section, or part of this act within such period, then the act, item,14
227	224		section, or part will not take effect unless approved by the people at the15
228	225		general election to be held in November 2026 and, in such case, will take16
229	226		effect on the date of the official declaration of the vote thereon by the17
230	227		governor.18
231	228		(2) This act applies to covenants not to compete entered into or19
232	229		renewed on or after the applicable effective date of this act.20
233	230		083
234	231		-7-