Quick Hit
The Colorado Legislature has passed a bill banning non-competitive agreements with doctors, doctors, dentists, nurses and midwives. The bill will make it clear if it is possible to non-compete in the sale or sale of a business, including direct and indirect ownership sales. If signed by the governor, the bill will come into effect on August 6, 2025.
State law allows non-competitive and non-integrated contracts with certain highly compensated employees, but the bill excludes healthcare providers from that provision.
State law allows restrictive contracts designed to protect trade secrets. However, the bill will not allow restrictive contracts if it “prohibits or effectively restricts health care providers.”
The ongoing practice of healthcare providers, the provider's new professional contact information, or the right to select a patient's provider's provider.
The bill clarifies state law provisions that allow non-competitive contracts related to the sale of businesses. This bill allows the sale or sale of business exceptions to apply to all or substantially all sales of business assets. To sell the profits of minorities of individuals who received capital as part of their compensation, the period of a non-competitive agreement is not permitted to exceed “the total considerations received by individuals received from the sale divided by the average annual cash compensation received from the business.”
Next Steps
Colorado employers may want to stock all of their non-competitive agreements and decide whether to apply to a healthcare provider. They recommend that you consider using other strategies, such as private contracts and employee retention strategies, to serve similar purposes, such as protecting employer trade secrets and training investments.
The bill does not apply to existing non-competitive agreements, but if signed by the governor, it will apply to those entered or updated after August 6, 2025.
Ogletree Deakins will continue to monitor development and provide updates on Colorado, Healthcare, unfair competition and trade secret blogs, and new information will be available.
David L. Zwisler is a shareholder in the Denver office of Ogletree Deakins.
This article was co-authored by Leah J. Shepherd, an author of the office of Ogletree Deakins' Washington DC.
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