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How do employers enforce a non-compete agreement?

On Behalf of | Mar 10, 2022 | Employment Law

Colorado has narrow guidelines for legal non-compete agreements. Contracts are only valid to protect trade secrets, enforce educational fee reimbursement, preserve the sale of the business, or for executive-level employees. The terms of the agreement must also be reasonable under Colorado law.

When an ex-employee has signed a non-compete agreement and does not abide by the contract, the previous employer may act promptly to prevent damages to the company.

What is a cease and desist letter?

If a company believes an ex-employee broke the regulations in a non-compete agreement, the company may first send a warning. The employer or an attorney can write a cease and desist letter demanding the ex-employee stop their actions and adhere to the contract. The letter should include a copy of the non-compete agreement that the employee signed.

Can an employer take an ex-employee to court over a breached non-compete agreement?

In situations where ex-employees continue to violate a valid non-compete agreement, the company may pursue litigation. Since damages to the business might be ongoing, courts often move quickly with these cases.

The company must provide evidence to prove the following:

  • The validity of the non-compete agreement
  • That the ex-employee performed activities that violated the contract
  • That the business suffered damages as a result of the violation

How do judges hold employees liable in these cases?

If a judge determines that an ex-employee violated a non-compete contract, the judge can grant an injunction. An injunction requires the ex-employee to stop participating in prohibited activities. The judge may also award monetary damages to the business if sufficient evidence proves the company suffered financial loss due to the ex-employee’s behavior.

Breaching a non-compete agreement may result in a lawsuit, so be familiar with the contract restrictions before leaving to work for another company.