Two New Colorado Laws Affecting Employers in August and October 2022

Jason Fisher

Share Post:

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.

More Articles

Real Estate Law

FinCEN and Real Estate: Additional Disclosure Requirements May Be On the Horizon for Real Estate Transactions

As part of the anti-money laundering regime under the Bank Secrecy Act of 1970 (the “BSA”), in late 2021, the Financial Crimes Enforcement Network (“FinCEN”) division of the Department of the Treasury issued an advanced notice of proposed rulemaking (“ANPRM”) seeking to address potential money laundering through real estate transactions. The comment period for the ANPRM closed on February 21, 2022. This ANPRM comes closely after the notice of proposed rulemaking related to the implementation of the Corporate Transparency Act (the “CTA”), which you can read more about here. Both the CTA and the proposed regulations under the ANPRM would require significant levels of disclosure regarding the beneficial ownership of companies and real estate in non-financed real estate transactions. These measures aim to reduce money laundering, and assets held by undisclosed foreign investors. It is estimated that between 2015 and 2020, at least $2.3 billion was laundered through U.S. real estate, though the actual figure is likely much higher Accordingly, both FinCEN and Congress are trying to limit the number of real estate transactions used to launder money.

Read More »
Work-Life Balance

Not All Who Wander are Lost

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 punctuate by in-person meetings–formal, over coffee or meals.in the hallways–and bookended by my daily commute between Denver and Los Angeles which ranged anywhere from just under 30 minutes to more than an hour.

Read More »
Estate Planning

Estate Planning for Women: Helping with Control

Let me get it out of the way…the elephant in the room after such a polarizing title. Estate planning is for everyone. Period. Regardless of your age, your marital status, your perceived wealth, or your family size, everyone benefits from preparing for the unexpected, covering essentials, ensuring a lifestyle, and ultimately leaving a legacy with minimal probate and family disputes.

Read More »