• Health Care & Health Insurance
• Labor & Employment

The bill introduces several key changes to the regulation of restrictive employment agreements in Colorado:

• Exclusion of Certain Professions from Exemptions:

  • The bill excludes from the highly compensated worker exemption any covenant not to compete that restricts the practice of:
    • Medicine
    • Advanced practice registered nursing
    • Dentistry
  • This means that such covenants are subject to stricter scrutiny and are not automatically enforceable based on compensation levels.

• Permissibility of Minority Ownership Covenants:

  • A covenant not to compete is permissible for an individual with a minority ownership share in a business if:
    • The individual received their ownership share as equity compensation or in connection with services rendered.
    • The covenant's duration does not exceed a number calculated by dividing the total consideration received from the sale by the average annualized cash compensation received from the business, including income from ownership interest during the preceding two years or the period of affiliation, whichever is shorter.

• Prohibition on Restricting Healthcare Provider Disclosures:

  • The bill prohibits covenants that prevent or materially restrict a healthcare provider from disclosing to a patient the following information:
    • The healthcare provider's continuing practice of medicine.
    • The healthcare provider's new professional contact information.
    • The patient's right to choose a medical provider.

These changes aim to balance the protection of employers' legitimate business interests with the rights of employees, particularly in the healthcare sector.

Under current law, there is an exemption from the general
prohibition against covenants not to compete. The exemption allows for
a covenant not to compete under specified conditions governing an
individual who earns an amount of annualized cash compensation
equivalent to or greater than the threshold amount for highly compensated
workers. The bill excludes from the highly compensated worker
exemption a covenant not to compete that restricts the practice of
medicine, the practice of advanced practice registered nursing, or the
practice of dentistry in this state.
Under current law, there is also an exemption from the general
prohibition against covenants not to solicit customers (nonsolicitation
covenant) that allows for a nonsolicitation covenant governing an
individual who earns an amount of annualized cash compensation
equivalent to or greater than 60% of the threshold amount for highly
compensated workers if the nonsolicitation covenant is no broader than
reasonably necessary to protect the employer's legitimate interest in
protecting trade secrets. The bill also excludes from the highly
compensated worker exemption for nonsolicitation covenants a covenant
not to compete that restricts the practice of medicine, the practice of
advanced practice registered nursing, or the practice of dentistry.
A covenant not to compete governing an individual who has a
minority ownership share of a business and who received their ownership
share in the business as equity compensation or otherwise in connection
with services rendered is permissible if the covenant's duration in years
does not exceed a number calculated by the total consideration received
by the individual from the sale divided by the average annualized cash
compensation received by the individual from the business, including
income received on account of the individual's ownership interest during
the preceding 2 years or during the period of time that the individual was
affiliated with the business, whichever period of time is shorter.
The bill prohibits a covenant that prevents or materially restricts
a health-care provider from disclosing to a patient to whom the
health-care provider was providing consultation or treatment before the
health-care provider's departure from a medical practice the following
information:
  • The health-care provider's continuing practice of medicine;
  • The health-care provider's new professional contact
information; or
  • The patient's right to choose a medical provider.

• April 03, 2025: House Business Affairs & Labor Committee Report
• March 06, 2025: Senate Business, Labor, & Technology Committee Report

• Past bill versions
• Past fiscal notes
• Committee activity and documents
• Bill History