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Employment Law

Two New Colorado Laws Affecting Employers in August and October 2022

Two New Colorado Laws Affecting Employers in August and October 2022

Jason Fisher

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Two new laws are set to take effect in the coming months that will require employees to examine their current practices and make changes to bring themselves into compliance.

House Bill 22-1317, taking effect in August 2022, substantially alters how non-competition agreements can be structured with Colorado employees and the Colorado Secure Savings Program, which will apply beginning in October 2022, requires employers to enroll in a state-run workplace retirement plan or provide their own.

House Bill 22-1317 – August 2022

Currently, Colorado law permits non-competition agreements with limited duration and geographic scope in several circumstances including for the protection of trade secrets and for executive or management personnel. HB 22-1317 removes these permitted exceptions and replaces them with only one circumstance: highly compensated employees (meaning those making $101,250 per year or more) for the protection of trade secrets provided the restriction not to compete is no broader than reasonably necessary to protect trade secrets. Customer non-solicitation agreements will be similarly limited to only those employees making at least 60% of the highly compensated threshold ($60,750 per year) and only as is reasonably necessary for the protection of trade secrets. These salary thresholds must be met both at the time the agreement was entered as well as at the time the agreement is being enforced.

These changes are not retroactive and so only apply to non-competition and non-solicitation agreements entered into after the effective date. Further, HB 22-1317 does not change the existing exceptions for non-competition agreements relating to the sale of a business or the recovery of educational and training expenses though the amendment does clarify what expenses are recoverable.

HB 22-1317 requires employers to provide a separate, written notice of any non-competition covenants and have such notice signed by the employee. In addition to being void, a non-competition agreement which does not satisfy the requirements of HB 22-1317 could make the employer liable for actual damages, reasonable costs, attorneys’ fees, and statutory penalties of up to $5,000 per employee. To avoid these damages, Colorado employees need to examine their current practices to avoid running afoul of the increasing restrictions on non-competition agreements.

Secure Savings Program – October 2022

With the launch of the Secure Savings Program, Colorado is joining fourteen other states in requiring employers provide a workplace retirement savings plan. The pilot program launches in October 2022 and will apply to all Colorado employers with five or more employees who have been in business for two or more years starting January 1, 2023.

Colorado employers who do not have a qualifying plan will be required to participate in the state-run program and offer enrollment to their employees and facilitate payroll deductions. Once enrolled, employees will be opted into a default savings rate of five percent of their gross pay. Employees will be able to change their contribution amount or opt out if desired.

Penalties for non-compliance can be up to $100 per employee per year increasing up to $5,000 per employee per year if non-compliance is ongoing. However, employers are provided one year from the effective date to bring themselves into compliance. Small businesses who have not previously considered a workplace retirement plan should begin considering the options available to them and whether an employer sponsored plan or the state-run program will better fit their organization.

ABOUT THE AUTHOR

ASSOCIATE

Jason focuses his practice on corporate governance, commercial finance, commercial contracts, and employment law. He advises clients on all aspects of general corporate matters and strategic business decisions including organization structure, operating/shareholder agreements, and private debt and equity offerings.

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Work-Life Balance

Not All Who Wander are Lost

Not All Who Wander are Lost

Milgrom Team

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“Not all those who wander are lost” – J.R.R. Tolkien

When I joined Milgrom & Daskam at the height of COVID, I wasn’t sure what the future would look like for me or this relatively young firm. We were giving up our physical office space in downtown Denver and embarking on a new vision for remote workers. Up until then, much of my professional work life was spent in an office environment, surrounded by colleagues. My days were punctuated by in-person meetings—formal, over coffee or meals in the hallways—and bookended by my daily commute between my home and office which ranged anywhere from just under 30 minutes to more than an hour depending on the day and where I was living at the time. As our Executive Director Chris Mendenhall noted in her recent blog “Running a Business – Remotely,” Milgrom & Daskam has opted to operate fully remotely for the time being, which at this point in my life and my career is a perfect place to be. For me, remote work means the opportunity to do meaningful work with amazing clients, all while traveling– a passion I share with my wife of 37 years and all our children. Among the six adults and three grandchildren in our family, we have been to all 50 states and more than 40 countries. And there are plenty more places we all still want to go.

A well-known misquote attributed to Saint Augustine said, “the world is a book and those who do not travel read only one page.” Too often, we, as lawyers, focus so much on the details that we fail to appreciate the bigger picture. Traveling has and will continue to make me a better lawyer. Exploring the world allows us to take a step back, refresh our perspective, and understand the world a little bit better. My experiences in Uganda and Rwanda, for example, taught me so much about people who do not share my background or experience, and I have been able to apply much of that learning to projects I am working on at home. (Speaking of Uganda, I encourage all of you to explore the Fin and Tonic Bar* facing Lake Bunyoni at the Entusi Resort and Retreat Center, a hidden gem I would never have found had I not ventured there with new friends and fellow Denverites whom I met while traveling abroad!)

Traveling also makes us healthier, both physically and mentally. Taking time for ourselves helps us to return to everyday life fresher, calmer, and ready to handle its constant stresses. Even if we can’t work and travel for extended periods, short breaks to meet new people and learn new things makes a big difference.

Finally, if done with an open mind and heart, I believe that traveling can make us better people. As Mark Twain said, “Travel is fatal to bigotry, prejudice, and narrowmindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.” Because travel takes us out of our comfort zone, it strengthens our ability to empathize with others, exercises our self-awareness, and bolsters our creativity.

Not everyone can say that they have found a career that lets them combine travel and work like those of us at M&D. However, if you have that opportunity, I encourage you to take advantage of it and hit the road this summer.

“A journey of a thousand miles begins with a single step.” – Lao Tzu (Chapter 64, Tao De Jing)

*The original Fin and Tonic was opened by my uncle in the Abaco Islands (Bahamas) in 1964.

ABOUT THE AUTHOR

OF COUNSEL

Charles joined Milgrom & Daskam in June 2020 and focuses on serving entrepreneurs, nonprofits and growth companies from ideation and formation to early and later stage capitalization and through mergers and acquisitions. His expertise includes companies focused on technology, renewable energy, and real estate, including affordable housing and new market tax credit development and financing.

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