Colorado Non-Compete Law C.R.S. § 8-2-113: Income Thresholds and Enforceability Explained

If you are navigating a job transition in cities like Denver, Boulder, or Colorado Springs, understanding your rights regarding restrictive covenants is vital. Historically, many companies routinely forced all workers to sign non-compete agreements. However, state law has drastically changed to protect workers. Generally, unless you earn a very high salary, your employer cannot legally prevent you from working for a competitor. By understanding the strict statutory mechanics, you can confidently take control of your career without fear of unlawful retaliation.

Step-by-Step Process for Evaluating Enforceability in Colorado

Colorado law generally favors the employee's right to earn a living. The primary statute governing these agreements is C.R.S. § 8-2-113, which establishes strict rules that employers must follow for a non-compete to be considered legally valid. If an employer misses even one of these steps, the entire agreement may be void.

Step 1: Analyzing the "Highly Compensated Employee" Exemption

The most important factor in Colorado is your income. A non-compete agreement is fundamentally void unless it falls under the "highly compensated employee" exemption. This means your annualized cash compensation must meet or exceed a specific dollar amount set by the state. This law protects standard wage earners, retail workers, and mid-level professionals from unfair career restrictions. If your salary is below the required threshold when you sign the agreement or when it is enforced, the non-compete is generally unenforceable.

Step 2: Checking the CDLE Annual Inflation Adjustments

The income threshold is not a static number. The Colorado Department of Labor and Employment, Denver (CDLE) evaluates and adjusts these thresholds annually based on inflation and cost-of-living metrics. Under the CDLE PAY CALC Order (7 CCR 1103-14), the highly compensated employee threshold is set at $130,014 for 2026 (up from $127,091 in 2025). Customer non-solicitation covenants require at least 60% of that threshold, amounting to $78,008.40 for 2026 (up from $76,254.60 in 2025). You must look at the specific threshold for the year the agreement was signed or enforced.

Step 3: Verifying the Statutory Notice Requirements

Even if you meet the salary threshold, the employer must follow strict procedural notice rules under C.R.S. § 8-2-113(4). The statute draws a clear distinction between new hires and existing staff: for prospective workers, the employer must provide clear, written notice of the covenant and its terms before the worker accepts the offer of employment. For current workers, the employer must provide the notice at least 14 days before the earlier of the effective date of the restriction or any change in the conditions of employment providing consideration. In both instances, the notice must be a separate, standalone document-it cannot be buried in an employee handbook. If your employer handed you the non-compete on your first day of work without prior notice, the covenant is void per se.

Step 4: Assessing Civil Penalties for Employer Violations

Colorado strictly penalizes employers who try to intimidate workers with illegal contracts. Under C.R.S. § 8-2-113(8), if a company enters into, presents to a worker, or attempts to enforce a void non-compete, or if they fail to satisfy the statutory notice rules, the employer is liable for actual damages and a statutory penalty of $5,000 per harmed worker. Workers may also be entitled to recover their reasonable attorney fees and costs if they must hire counsel to defend against an illegal restriction. You can find experienced employment lawyers in our US Lawyers Directory to help you assess your employer's liability.

How Much Does it Cost to Fight in Colorado?

If you need to formally challenge an illegal non-compete in a Colorado District Court, you must pay court filing fees. Filing a civil complaint alongside a Form JDF 600, Colorado, Judicial Branch, District Court Civil Summons and a Form JDF 601, Colorado, Judicial Branch, District Court Civil Case Cover Sheet (governed by C.R.C.P. 16.1) requires a standard docket fee of $265 under C.R.S. § 13-32-101. If you hire an attorney, they may charge hourly rates ranging from $250 to $600 per hour, depending on their experience. However, because C.R.S. § 8-2-113(8)(b) includes mandatory fee-shifting provisions, a successful employee can recover actual damages, costs, and reasonable attorney fees from an employer attempting to enforce an unlawful covenant.

How Long Does the Process Take?

Resolving a non-compete dispute varies widely. If your lawyer drafts a strong pushback letter citing the CDLE thresholds, the employer might drop the issue within 2 to 4 weeks. If the dispute escalates into a formal lawsuit seeking an injunction, the process could easily take 6 to 12 months as it works its way through the local District Court.

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