On August 4, Emily Keimig, Beth Ann Lennon, and Carissa Davis published “Colorado tightens rules on noncompete agreements” in ColoradoBiz. The following is an excerpt:
Colorado has taken another step toward narrowing the circumstances in which restrictive covenants, such as covenants not to compete and customer nonsolicits, may be used. Senate Bill 25-083, which takes effect August 6, 2025, now severely restricts nonsolicit and noncompete agreements for certain “health-care providers” and refines the exception allowing for restrictive covenants for the sale of a business.
In Brief:
- SB 25-083 restricts noncompetes for health-care providers
- New rules clarify business sale exceptions for equity holders
- Law takes effect August 6, 2025, and excludes prior agreements
- Companies urged to review covenants with legal counsel
In 2022, the state legislature overhauled the long-standing Colorado restrictive covenant law to eliminate certain exceptions to the otherwise broad prohibition on noncompetes and nonsolicits. For those that remained, the 2022 amendments placed restrictions on their use (and the use of the previously unrestrained confidentiality agreements) and provided new potential legal claims, rights, and remedies for both aggrieved workers (employees and independent contractors) and new employers seeking to hire them.
SB 25-083 Significantly Limits Restrictive Covenants for Health-Care Providers
SB 25-083 adds new restrictions and refines others. Specifically, the bill nearly eliminates the circumstances under which restrictive covenants are permissible for “health-care providers.”
Health-care providers subject to this law include those licensed to practice medicine (including physicians assistants), advanced-practice registered nursing, certified midwifery and dentistry. This is a significant departure from the statute’s prior healthcare language, which applied only to physicians. Moving forward, any restrictive covenant will be void if it prohibits or materially restricts any health-care provider from disclosing to their patients that they will continue the practice of medicine at a new location, from providing their new contact information, or from explaining that the patient has the right to choose their own provider.
SB 25-083 also removes the long-existing provision that had allowed companies to recover damages for competition from a departing physician. The removal of such language calls into question the viability of liquidated damages provisions for these workers.
For the full article, click here.