Mar 29, 2013

By: Craig Watrous

Every Colorado business dreads the thought of losing a trusted, management or executive level employee to a competitor or to start their own competing business. Having a well-drafted and enforceable non-compete agreement is an important method to limit the damage to your business from the loss of a key employee to a competing business.

The former employee or his new employer will likely challenge the enforceability of the non-compete agreement. Historically such agreements were viewed as unlawful restraints on trade. Today, such agreements can be enforceable, but this will depend on how the non-compete is drafted, especially regarding the former employee’s duties and responsibilities and how the non-compete is designed to protect the company’s specific business interests. Careful consideration of several factors is important to make the agreement more likely to hold up in court.

Whether the non-compete is enforceable in Colorado will, in the first instance, depend on whether it falls within categories permitted under the Colorado statute, namely:

  • Restrictions contained in the sale of a business;
  • Protection of trade secrets;
  • Recovery of employee training or educational expenses; and,
  • Restrictions limited to “executive” and “management” personnel and their professional staff.

The non-compete restrictions must also be reasonable in their: 1) duration, and 2) geographic scope. Determining the reasonableness of these two provisions depends on your business and industry, and it is often determined on a case-by-case basis. If a court determines that the restrictions are overreaching or unreasonable, the court may deny enforcement of a specific provision or the entire agreement.

Taking preventative measures to protect your company can reduce the risks of an ex-employee or a competitor unfairly using your sensitive business information, trade secrets, customer information and business plans in competition with your business. In follow-up posts, we will discuss enforcement of non-compete agreements as well as the very important use of confidentiality/non-disclosure and non-solicitation clauses in conjunction with a non-compete. Not only can the competition from a former employee seriously hurt your business, but the litigation expenses of trying to enforce a poorly drafted non-compete can be costly and time consuming, and might not be successful.  Having a well-drafted and enforceable non-competition agreement can help prevent these types of business disputes or quickly bring them to a conclusion.

The attorneys at Mallon & Lonnquist are experienced in drafting and enforcing non-competition, non-solicitation and non-disclosure agreements on behalf of Colorado employers.  Please contact us if you would like to speak with us about drafting or enforcing non-competes.

Mallon & Lonnquist, LLC, is a business, employment, real estate, and litigation law firm. Craig T. Watrous is a Colorado business attorney with Mallon & Lonnquist, based in Denver, Colorado. Craig regularly represents business owners and employees in contractual, transactional and litigation related matters.  Craig can be reached at

Category: M&L Legal Posts

Category List

Tag List

Finance Law (2)
Real Estate Law Firm (3)
CO Business Non-Solicitation Restrictions (1)
Certifiably Green Denver (1)
Colorado Spanish Legal Services (1)
Commercial Real Estate (1)
Corporate Law (8)
Resolving Business Disputes (1)
Helmet Recall (1)
Non-Solicitation (1)
Co-Ownership Agreement (1)
Employment Law (1)
Labor (3)
Denver Colorado Business Attorney (9)
Mergers & Acquisitions (5)
CO Ski and Snowboard Gear Recall (1)
Ethics (1)
Data Breach Settlement (1)
Mechanic's Liens (1)
Wrongful Death Settlement (1)
Spanish Legal Services (7)
Spanish Business Law (9)
Colorado Business (56)
cause for termination (1)
Non-Disclosure (1)
Construction Contracts (5)
Colorado Real Estate (11)
Non-Competition Agreements (12)
Commercial Property (1)
Colorado Enforcement of Non-Compete (2)
Enforcing Non-Solicitation Agreement (1)
St. Anthony, Minnesota (1)
Denver Broncos (1)
Lease Negotiations (1)
Colorado Construction (1)
Our Courts Colorado (1)
LLC Law (2)
Colorado Courts (1)
Employment (3)
Credit Card Data (1)
CO Attorney Mentoring Program (1)
Property Surveys (1)
Non-Solicitiation (1)
Colorado business disputes (1)
Construction Bond Claims (2)
Colorado Employment (20)
Cherry Creek Chamber of Commerce (1)
Denver arbitration (1)
Alternative Dispute Resolution (5)
Non-Compete, Colorado non-compete restrictions, enforcing non-compete, protecting Colorado business (1)
Colorado Wrongful Death (1)
Denver Sustainable Law Firm (1)
Colorado LLC (1)
Arbitration (2)
Snowboard Gear (1)
cyber security (3)
Colorado Judicial Institute (1)
Real Estate (4)
Colorado Foundation for Water Education (1)
Leases (4)
Trade Secrets (6)
Non-Compete (2)
Skiing Gear (1)
Colorado at-will employment (1)
Data Breach (2)
Litigation (15)
Community (28)
Colorado Hispanic Bar Association (1)
Construction (6)
Colorado Lis Pendens (1)
Colorado Retail Leasing (1)
courts (1)
Overtime Wages (2)
Business Contracts (1)