Chapter 34 - § 34.2 • DRAFTING TIPS

• Jurisdiction: Colorado

§ 34.2 • DRAFTING TIPS

Colorado law is a minefield for those attempting to draft an enforceable non-solicit, noncompete or confidentiality agreement. The suggestions below should help ensure that such agreements are enforceable yet fair.

Non-solicit and Noncompete Agreements Must be Reasonable. Any agreement not to compete or solicit customers must be reasonable in terms of its duration and geographic scope. Provisions that are unlimited in either respect may be difficult or impossible to enforce. Particularly with respect to the geographic limitation, close attention should be paid to where the employer does business, and the scope of the agreement should mirror that territory.

Consider Whether a Confidentiality Agreement Alone Will Suffice. A confidentiality agreement, standing alone, is not impacted by C.R.S. § 8-2-113 since it does not affect a party's ability to earn a living. A specific confidentiality provision, perhaps accompanied by a liquidated damages clause, is much more likely to withstand judicial scrutiny if it is not accompanied by a noncompete or non-solicit provision.

Specificity is Critical. In drafting any agreement, the more specific the provision, the more likely it is that the agreement will be enforced. For example, if a noncompete provision is necessary to protect trade secrets, state that fact and further list the trade secrets or confidential information that is being protected. If an employee is an executive or a manager, or professional staff to an executive or manager, indicate that fact in the agreement and include the statutory citation. This provides clarity to both sides and sets expectations at the beginning of the relationship. The importance of specificity can be seen by comparing two cases. Saturn Systems v. Militare, 252 P.3d at 526-27, provides an example of a confidentiality and non-solicit provision that was enforced. Management Recruiters of Boulder v. Miller, 762 P.2d 763, holds that a "general," "blanket" noncompete provision is unenforceable. As a corollary, any restriction should be as narrowly crafted as possible.

Consider Choice of Law and Venue Provisions. Colorado has a compelling interest in applying its laws to non-solicitation and similar agreements. Jacquat v. Hub Int'l Ins. Serv., No. 09-cv-02539-WYD-MJW, 2010 WL 956870 at *7 (D. Colo. June 15, 2010). In Jacquat, the defendant employer was a California corporation and the plaintiff was residing in Colorado. The agreement contained a New Mexico...