Since the 2022 overhaul of Colorado’s restrictive covenant statute, C.R.S. § 8-2-113, the Colorado legislature has made ongoing amendments to the law which continue the trend of limiting the effectiveness of restrictive covenants in the state. Most recently, the 2025 General Assembly took aim at the provisions of the statute regarding restrictive covenants’ applicability to select healthcare providers as well as buyers and sellers of a business.
Healthcare Providers
Senate Bill 83, recently signed into law by Governor Jared Polis, explicitly prohibits noncompete agreements for the protection of trade secrets that restrict the practices of medicine, advanced practice registered nursing, or dentistry in Colorado, regardless of the current highly compensated individual exemption. Even under the current iteration of the law, any noncompete provision in an employment, partnership, or corporate agreement that restricts a physician’s right to practice medicine after leaving a job is void. However, noncompete agreements are presently permitted to require physicians to pay reasonable damages if they depart and engage in future competition. Senate Bill 83 forecloses the possibility of those damages going forward and ensures the right of physicians, registered nurses, and dentists to practice elsewhere without financial consequence, even when in direct competition with a previous employer.
Senate Bill 83 additionally takes two proactive steps to protect select healthcare providers’ future practices. First, the bill excludes the practices of medicine, advanced practice registered nursing, and dentistry from the customer non-solicitation provisions of the law, which permit such non-solicitation agreements with individuals who earn at least 60% of the highly compensated individual threshold. Second, the bill explicitly prohibits restrictive covenants that disallow healthcare providers from disclosing key information to patients whom the departing healthcare provider is providing consultation or treatment. Specifically, healthcare providers (defined as an individual licensed to engage in the practices of medicine, including as a physician assistant, advanced practice registered nursing, midwifery, and dentistry) will be permitted to share: (a) the healthcare provider’s continuing practice of medicine; (b) the healthcare provider’s new professional contact information; and (c) the patient’s right to choose a healthcare provider.
Purchase and Sale of a Business
A noncompete agreement related to the purchase and sale of a business, a direct or indirect ownership share in a business, or all or substantially all of the assets of a business, continues to be valid under Senate Bill 83. Note, however, that this provision of the bill does not address when a physician is involved in the purchase and sale of a business. Regardless, the bill creates a time limit for noncompete agreements that apply to minority owners who received their ownership share in the business as equity compensation. The time limit must not exceed a number calculated by dividing the total consideration from the sale by the average annualized cash compensation received on account of their ownership interest during preceding two years or during the period of time that the individual was affiliated with the business, whichever period is shorter
Similar to the present law, the bill permits enforcement of the amendments by the attorney general.
Next Steps
Senate Bill 83 will take effect on August 6, 2025. The amendments will apply to noncompete agreements entered into or renewed on or after the effective date and are not retroactive. Therefore, employers looking to take advantage of the present iteration of the law, including enforceable competition damages for physicians, should take swift steps to ensure their noncompete agreements are in place before the August deadline.
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