Are they enforceable? Typical "attorney" response: Well, it depends. There is no special bar voiding non-compete agreements for independent contractors. In Colorado, independent contractors and employees are treated the same when enforcing non-compete agreements.
In Colorado, non-compete agreements are generally void and unenforceable, even if the two parties agree to its terms. Non-competes can be enforced when it applies to (a) the sale of a business, (b) the protection of trade secrets, (c) the recovery of educating and training an employee, and (d) executive and management personnel.
The most common exception for the enforcement of non-compete agreements against independent contractors in Colorado is for the protection of trade secrets. For information to constitute a trade secret, the information must be subject to reasonable efforts to maintain its secrecy. Information is not protectable as a trade secret when it is readily available and the owner does not take measures to keep it confidential.
Non-compete agreements must be no broader than necessary and must not create an undue hardship on the independent contractor. Even if a non-compete agreement falls within one of the four exceptions, the geographic scope, time duration, and scope of work limited must all be reasonable. If it is found that one of these three elements of the non-compete agreement is unreasonable, then the non-compete is likely unenforceable.
While including a non-compete agreement in a contract with an independent contractor is a good business practice, it is somewhat unlikely that the non-compete will be enforced if a dispute arises. The non-compete will likely act more as a deterrent.
The information contained on this blog is intended to be general information only and not legal advice. This blog topic is not intended to be fully comprehensive. For these reasons, we suggest you seek a licensed attorney to help you review and revise your agreements. If you have any questions about the contents of this blog or if you need legal advice, please contact the Beavers O'Connell Group at (720)538-0363, [email protected]or fill out a form under our Contact page.