Colorado NDA Agreements: Enforceability and HB 22-1317 Impact

Colorado was once a moderate state on non-compete law — permitting reasonable restrictions with some judicial scrutiny. House Bill 22-1317, effective August 10, 2022, changed that dramatically, imposing specific salary thresholds, procedural requirements, and a private right of action that fundamentally altered how Colorado employers must approach post-employment restrictions. Yet non-disclosure agreements (NDAs) remain broadly enforceable in Colorado, and trade secret protection under the Colorado Uniform Trade Secrets Act continues to provide robust protection for employers who manage their proprietary information correctly.

HB 22-1317: What Changed for Non-Competes and Non-Solicitation

HB 22-1317, codified at CRS §8-2-113, established a comprehensive new framework for restrictive covenants. The key changes effective August 10, 2022:

Non-compete salary threshold: Post-employment non-compete agreements are only enforceable against employees who earn above a threshold established annually by the Colorado DOLE. For 2026, the threshold is approximately $123,750 per year. Only employees earning above this amount may be subject to a non-compete, and only to protect trade secrets or to recover extraordinary compensation paid to the employee (e.g., specialized training, equity grants).

Non-solicitation salary threshold: Non-solicitation agreements (protecting customer relationships and referral sources) apply to employees earning above approximately $74,250 per year (2026 threshold). Employee non-solicitation agreements (restricting recruiting of coworkers) have the same threshold. Both thresholds are adjusted annually.

Professional exceptions: Employees who are physicians, physician assistants, dentists, and similar licensed healthcare professionals may be subject to non-compete agreements under special rules that predate HB 22-1317. These professionals may be subject to non-competes regardless of salary, but with geographic and time limitations mandated by their professional regulatory statutes.

Mandatory Disclosure: The 14-Day Requirement

One of HB 22-1317's most significant procedural requirements is the mandatory pre-signing disclosure. Before an employee (or prospective employee) signs any restrictive covenant — including a non-compete, non-solicitation, or NDA that restricts disclosure for an unusually long period — the employer must:

1. Provide the restrictive covenant document to the employee as a separate document distinct from any other agreement (like an employment agreement or confidentiality agreement).
2. Provide the document to the employee at least 14 calendar days before either the start of employment or the date on which the employer requires the signature — whichever is earlier.
3. Notify the employee in writing that they may (and should) consult with an attorney before signing.

Failure to comply with the 14-day disclosure requirement renders the entire restrictive covenant void and unenforceable. This is not a curable defect — an employer who presents a non-compete on the first day of work, even to a well-compensated employee who clearly understood its terms, has violated this requirement. The restrictive covenant is simply invalid.

NDAs in Colorado: Broadly Enforceable Without the HB 22-1317 Thresholds

Here is a distinction that many Colorado employers miss: HB 22-1317 and CRS §8-2-113 primarily govern post-employment restrictions on competitive activity — non-competes and non-solicitation clauses. Pure non-disclosure agreements (NDAs) that prohibit the disclosure of confidential information but do not restrict what job the employee can take are generally not subject to the salary thresholds or the professional exception requirements.

A Colorado NDA that says "employee agrees not to disclose Company X's confidential customer lists, financial projections, and proprietary technology to any third party, during and after employment" is enforceable regardless of the employee's salary and without the 14-day pre-signing disclosure requirement (though providing 14 days is still best practice for any restrictive covenant). The key distinction is between restrictions on disclosure (NDA — broadly permissible) and restrictions on competitive employment (non-compete — subject to thresholds).

However, NDAs that are so broadly drafted that they effectively function as a non-compete — by prohibiting disclosure of information that would be essential to performing any job in the employee's field — may be treated as functional non-competes by Colorado courts and subjected to the HB 22-1317 requirements. Draft NDAs to protect genuinely confidential information, not to prevent employees from using their general professional skills and knowledge.

Colorado Uniform Trade Secrets Act (CUTSA)

Colorado adopted the Uniform Trade Secrets Act, codified at CRS §7-74-101 et seq. (CUTSA). CUTSA defines a trade secret as information that: (a) derives independent economic value from not being generally known or readily ascertainable by proper means, and (b) is the subject of reasonable efforts to maintain its secrecy. CUTSA provides remedies for misappropriation including injunctive relief, damages (including unjust enrichment), exemplary damages (up to two times actual damages for willful misappropriation), and attorney's fees.

CUTSA preempts most state law claims based on the same conduct as trade secret misappropriation — meaning that breach of confidence, unjust enrichment, or conversion claims that are essentially the same as a misappropriation claim must be brought under CUTSA, not as separate tort claims. This preemption has significant litigation strategy implications for both plaintiffs and defendants.

To benefit from CUTSA protection, Colorado employers must take "reasonable steps" to protect their trade secrets. Courts have found reasonable efforts to include: NDA requirements for all employees with access to confidential information, password protection and access controls on sensitive systems, marking confidential documents with "CONFIDENTIAL" or equivalent notices, limiting information access on a need-to-know basis, and conducting exit interviews and reminding departing employees of confidentiality obligations.

Effective Colorado NDA Drafting Principles

Given HB 22-1317's landscape and the CUTSA framework, a well-drafted Colorado NDA should include the following:

• Specific definition of confidential information: Identify the categories of information protected — customer lists, pricing, formulas, software code, business plans, financial data. Avoid catch-all language that encompasses all information the employee learns in their work, which courts have held goes too far.
• Exclusions from confidential information: Standard exclusions include information that becomes public through no fault of the employee, information already known to the employee before employment, information independently developed by the employee, and information required to be disclosed by law.
• Duration: Specify how long the confidentiality obligation lasts. For genuine trade secrets, "for as long as the information remains a trade secret" is appropriate. For non-trade-secret confidential information, a defined term (3–5 years) is more appropriate and more defensible.
• Return of materials: Require the employee to return all confidential materials upon termination and certify in writing that they have done so.
• DTSA whistleblower notice: The federal Defend Trade Secrets Act requires that all employment agreements containing confidentiality provisions include a notice that employees cannot be held liable for disclosing trade secrets to the government for whistleblower purposes. Including this notice in every Colorado NDA is required to preserve the right to seek exemplary damages and attorney's fees under the DTSA.

Private Right of Action and Enforcement

HB 22-1317 created an express private right of action for employees. An employee who is subject to a void restrictive covenant — one that violates the salary thresholds, the professional exception requirements, or the disclosure procedure — can sue the employer to have the agreement declared void and to recover attorney's fees and costs. The employee does not need to wait for the employer to attempt enforcement; a proactive declaratory judgment action is permitted.

Employers who attempt to enforce a void restrictive covenant — through a cease-and-desist letter, preliminary injunction motion, or otherwise — may also face an attorney's fees claim from the employee. This creates a significant deterrent effect and means that Colorado employers should carefully audit their existing non-compete agreements before sending any enforcement communications to departing employees.