Unraveling the Enforceability of Colorado Non-Solicitation Clauses

Sep 18, 2017

by Reed F. Morris:reed.jpg

MLMW often gets questions involving the enforceability of non-compete agreements in Colorado, where our practice represents both companies and individuals. As enforcement actions increase both in and out of court, the gray areas surrounding the scope of what is enforceable has become heightened. Since a non-compete/non-solicitation agreement often contains a clause awarding the prevailing party their attorneys fees, understanding enforceability of these agreements is important before making the economic decision to litigate.

As we've written previously, non-compete agreements in Colorado are void unless one of the statutory exceptions are found. The most common statutory exceptions are the executive and management personnel exception, agreements against competition in the context of the sale of the company, and agreements to enforce protections of a company's trade secrets. But what about provisions that don't specifically address the work of the company, but rather the solicitation of the company’s employees or clients? Non-solicitation clause interpretation is where a particular gray area in Colorado law is some of the most pronounced.

At least one Colorado case has recognized that restraining the ability to solicit work from customers or clients of the business is itself an agreement barring competition. As such, the lens through which a non-solicitation clause should be presumptively viewed is that the clause itself is a non-compete. Whether it's called a non-solicitation clause or a non-compete is not going to matter. The court is going to look at substance rather than the name of the agreement or title given to a particular section.

What courts do focus on is what type of solicitation is prohibited. For example, individuals still may be subject to an enforceable non-solicitation clause even where a presumptively invalid non-compete agreement exists, such as for a lower-level worker (i.e., not management or executive level). It is the type of non-solicitation clause that will drive the court's analysis. If a non-solicitation clause is geared towards clients or customers, it would be viewed similarly to a general non-compete and could be held invalid. However, if the non-solicitation provisions are only related to employees of the company (seeking to prohibit an employee from taking other employees with them to start a new venture), such provisions have been held enforceable against lower-level employees in Colorado, even if a non-competition agreement itself is invalid.

The attorneys at MLMW are experienced in drafting and enforcing non-competition, non-solicitation and non-disclosure agreements in Colorado.  Please contact us if you would like to speak with us about drafting or enforcing non-competes.


Related Posts:

Enforcement of Colorado Non-Compete Agreements Against Executive and Management Personnel

Colorado Non-Competes in the Sale of Business

NYT – When the Guy Making Your Sandwich Has a Non-compete Clause


Reed F. Morris is a Colorado business and real estate litigation attorney with Mallon Lonnquist Morris & Watrous, based in Denver, Colorado. Reed regularlymlmw_mark_MD_Transparent.jpg represents businesses and individuals in business transactions and disputes, from pre-filing through trial, and can be reached at rmorris@mlmw-law.com.   

Category: M&L Legal Posts

Category List

Tag List

Snowboard Gear (1)
Taxes (1)
Denver Real Estate (1)
Contracts (3)
Colorado Employment (20)
Reed Morris (1)
Non-Solicitation (1)
LLC Law (2)
courts (1)
Denver Sustainable Law Firm (1)
Colorado Wrongful Death (1)
Cherry Creek Chamber of Commerce (1)
Denver Business Law (1)
Research (1)
Non-Disclosure (1)
CO Attorney Mentoring Program (1)
Credit Card Data (1)
Cell Tower Leases (1)
Colorado business disputes (1)
Lease Negotiations (1)
St. Anthony, Minnesota (1)
Leasing Standard (1)
Denver Colorado Business Attorney (9)
American Bar Association (2)
Spanish Speaking Lawyers Committee (3)
Overtime Wages (2)
Business Contracts (8)
ADR (2)
ABA (1)
Alternative Dispute Resolution (6)
Employment (4)
Construction (6)
Colorado Construction (1)
Colorado Retail Leasing (1)
Real Estate Law Firm (3)
Mergers & Acquisitions (5)
Spanish Legal Services (10)
Stock Options (1)
Business (5)
Business Litigation (4)
Skiing Gear (1)
News and Updates (15)
Landlords (1)
Resolutions (1)
Ethics (1)
Labor (3)
County Court (1)
Certifiably Green Denver (1)
Spanish Business Law (9)
Colorado Enforcement of Non-Compete (2)
Phantom Stock (1)
Data Breach Settlement (1)
Colorado Foundation for Water Education (1)
Panelist (1)
Employment Law (1)
Arbitration (5)
Colorado LLC (1)
Co-Ownership Agreement (1)
indemnifications (3)
Non-Competition Agreements (12)
CO Ski and Snowboard Gear Recall (1)
Colorado Judicial Institute (1)
subcontractor negotiations (2)
Construction Contracts (5)
Landowners (1)
Master Services Agreement (2)
Colorado Spanish Legal Services (1)
Our Courts Colorado (1)
Data Breach (2)
Business Disputes (8)
Legal Updates (5)
ABA Article (1)
Wrongful Death Settlement (1)
Property Surveys (1)
Legal Services (1)
Finance Law (2)
cyber security (3)
Corporate Law (8)
Mechanic's Liens (1)
attorney-client privilege (2)
Colorado Business (56)
Resolving Business Disputes (1)
cause for termination (1)
Denver Business Journal (2)
Leases (7)
Denver Broncos (1)
Community (33)
Colorado Hispanic Bar Association (1)
Colorado Lis Pendens (1)
Commercial Real Estate (2)
Incentive Plans (1)
Litigation (19)
Enforcing Non-Solicitation Agreement (1)
Colorado attorney mentor (2)
Trade Secrets (6)
Business Law (1)
Commercial Property (2)
Non-Compete (2)
CO Business Non-Solicitation Restrictions (1)
Non-Solicitiation (1)
Construction Bond Claims (2)
Denver arbitration (1)
Business Attorney (2)
Breach of Contract (3)
Colorado Real Estate (11)
Business Services (5)
Colorado at-will employment (1)
Helmet Recall (1)
Real Estate (6)
Mediation (1)
Non-Compete, Colorado non-compete restrictions, enforcing non-compete, protecting Colorado business (1)
Colorado Courts (2)