Coming August 2022: Colorado Substantially Limits Noncompete Agreements

Beginning August 10, 2022, Colorado will drastically narrow the circumstances in which Colorado employers can seek to enforce noncompete and other restrictive employment agreements. Despite Colorado law already having a general restriction against the use of noncompete agreements, the Colorado General Assembly recently passed, and Gov. Jared Polis has now signed, HB 22-1317. With this bill, Colorado joins the growing number of states enacting increased employee protections against restrictive covenant agreements, including banning such agreements with workers earning below a certain threshold.

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NYC Releases Fact Sheet on Salary Transparency Requirements in Job, Transfer and Promotion Advertisements – While the City Council Debates Delaying Enactment of the New Law

Employers face new challenges in navigating state and local pay equity laws. New York City joins a number of other jurisdictions that now require employers to disclose pay ranges when advertising job postings – including for incumbents as well as new hires. This law is set to take effect on May 15, 2022 (unless delayed by pending legislation discussed below). The New York City Commission on Human Rights (the “NYCCHR”) recently published a fact sheet providing guidance with regard to Local Law 32 of 2022 (the “NYC Law”). The NYC Law requires all covered employers to include a minimum and a maximum salary in any advertisement for a job, promotion, or transfer opportunity.

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State & Local Employment Law Developments: Q1 2022

The first quarter of 2022 continued the trend of increasing regulation of the workplace by state and local governments. Although it is not possible to discuss all state and local laws, this update provides an overview of recent and upcoming legislative developments to help you and your organization stay in compliance. (Please note that developments related to issues such as minimum wage rates and COVID-19 are not included.)

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Colorado Issues New Guidance on Prohibition Against Forfeiture of Earned Vacation or PTO

A series of recent developments in Colorado law have made it clear that employers are prohibited from causing employees to forfeit earned vacation time. A compilation of recent developments and the Colorado Department of Labor and Employment’s current position are contained in Interpretive Notice & Formal Opinion (INFO) #14, which explains that:

  1. Employees must be paid all earned vacation pay when their job ends.
  2. No employment policy or agreement can waive or forfeit earned vacation at any time.
  3. All paid leave which can be used at the discretion of the employee is considered “vacation pay” subject to the non-forfeiture rules.

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Several States are Increasing Penalties for Enforcing Non-Compete Agreements

As non-competition laws and the scrutiny of non-compete agreements continue to be in the spotlight, several states are revisiting their non-compete laws.  Colorado has been in the spotlight after the Colorado Legislature passed S.B. 21-271 on July 6, 2021 in an effort to reform the sentencing provisions related to numerous petty offenses and misdemeanors. As a result, several Colorado laws related to labor and employment are affected, including Colorado’s statute addressing restrictive covenant agreements, C.R.S. § 8-2-113.

Under C.R.S. § 8-2-113, it is unlawful to: intimidate workers in order to limit their ability to engage in lawful work; and enter into covenants that restrict trade, such as non-compete and non-solicitation agreements, unless the covenants fit within limited exceptions provided under the statute. The penalty if convicted for violating the non-compete statute is currently a misdemeanor punishable by a fine between $10–$250, or jail time of not more than 60 days, or both. C.R.S. § 8-2-115.   Effective March 1, 2022, the penalty for violating the non-compete statute will be increased to a class 2 misdemeanor punishable by up to 120 days in jail, or a fine of up to $750, or both, as a result of the changes from S.B. 21-271.  S.B. 21-271 also amends the text of C.R.S. § 8-2-113 to include the increased penalty as a new subsection (4).

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Colorado Increases Its Criminal Penalty for Violations of Its Noncompete Law

On July 6, 2021, the Colorado legislature passed S.B. 21-271 in an effort to reform the sentencing provisions related to a number of petty offenses and misdemeanors. As a result, several Colorado laws related to labor and employment are affected, including Colorado’s statute addressing restrictive covenant and noncompete agreements, C.R.S. § 8-2-113. Under C.R.S. § 8-2-113, it is unlawful to intimidate workers in order to limit their ability to engage in lawful work; and covenants that restrict trade, such as noncompete and nonsolicitation agreements, are void unless the covenants fit within limited exceptions provided under the statute. Effective March 1, 2022, the penalty for violating the noncompete statute will be increased to a class 2 misdemeanor punishable by up to 120 days in jail, or a fine of up to $750, or both.

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