Non-Competition & Trade Secrets
Employers and employees, supervisors, managers, executives, and professionals may need to use, defend, enforce, or challenge a non-competition and/or trade secret agreement. Employees and employers are served by seeking counsel to acquire an understanding of their rights and responsibilities under any non-competition or trade secret agreement.
Murray Law welcomes the opportunity to represent employees and employers in matters involving non-competition and trade secret agreements. Steven Murray has represented employees and employers in non-competition law, including evaluating agreements, engaging in pre-litigation efforts to resolve disputes on agreements, serving as counsel in temporary restraining order and preliminary injunction proceedings, and a full-scale trial on the enforceability of non-competition agreements.
Non-competition agreements exist between an employee and employer to prevent or limit a former employee from competing against a prior employer by using knowledge acquired through the prior employer.
Employers may include non-solicitation provisions in non-competition agreements. The non-solicitation provision seeks to prohibit an employee from soliciting his or her former employer’s customers and/or employees, following the employee leaving the workforce of the former employer.
A key factor in evaluating any non-competition agreement is the enforceability of the agreement. For example, despite the fact an employer and employee signed the contract, the agreement is not enforceable unless the agreement satisfies the requirements of Colorado law or the state which controls the interpretation of the agreement.Colorado Non-Competition Law
State law is critical in evaluating non-competition agreements.
Colorado law prohibits non-compete agreements, however, the exceptions to the law provide avenues for enforceable non-competition agreements. Colorado law, C.R.S. Section 8-2-113(a)-(d), provides:
Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void but this provision shall not apply to:
- (a) Any contract for the purchase and sale of a business or the assets of a business;
- (b) Any contract for the protection of trade secrets;
- (c) Any contractual provision providing for the recovery of the expense of education and training an employee who has served an employer for a period of less than two years;
- (d) Executive and managerial personnel and officers and employers who constitute professional staff to executive and management personnel.
On May 11, 2016, President Obama signed the Defend Trade Secrets Act [DTSA] into law. The DTSA, a federal law, creates a new claim for misappropriation of trade secrets. The DTSA is based on the Uniform Trade Secrets Act, as is the Colorado Trade Secrets Act. The DTSA specifically provides that it does not preempt state law. Litigation under the DTSA will specially define the specific application of the law.
The Colorado Uniform Trade Secrets Act addresses trade secrets and misappropriation. The holder of the trade secret may file a lawsuit against the person or entity misappropriating a protected trade secret.
In Colorado, the theft of a trade secret is recognized as a criminal offense.
Colorado courts rely on a multiple-factor analysis determine the enforceability of trade secrets agreements, including the trade secret exception to the Colorado non-competition law. Information is more likely to be a trade secret when:
- The information is only known to a specific business and the employees of the business.
- The information is not readily available or obtainable to the public.
- The holder of the trade secret has taken significant steps to protect the confidentiality of the information.
- The information is valuable to the holder of the protected information.
A party seeking to enforce or challenge the enforceability of a non-competition or trade secret agreement has a variety of legal options to pursue to achieve its objective; including but not limited to filing a motion for a temporary restraining order and/or a motion for a preliminary injunction; and/or a motion for declaratory judgment.Conclusion
Murray Law welcomes the opportunity to counsel and represent employees and employers in matters involving the critical professional and business rights at issue in non-competition and trade secret agreements. Please call Steven Murray at 720-600-6642.