The United States bases the strength of its economy on competition and a free market. At the same, businesses have the right to protect confidential and proprietary information.
Non-compete clauses seek to strike a balance by preventing exiting employees from taking advantage of insider knowledge about a former employer. Individuals may wonder how a firing affects such stipulations.
A dismissal does not change a contract
A non-compete clause usually remains intact after a company lays off or fires an employee. Conditions usually mean people cannot work for a company in the same industry or start a similar business. Doing this prevents a competitor from taking a business’s clients or gaining access to organizational secrets.
An employee could petition the employer to waive the clause when the person has to leave involuntarily. Depending on the circumstances, a company may be open to this request if it will not harm the company. Unless the contract involves an issue of legality, the agreement stands against any challenges.
Colorado favors employees in non-compete agreements
The State of Colorado seeks to promote competition and labor by restricting what an employer can ask of an employee in a non-compete contract. Any agreement prohibiting an individual from performing work for compensation is typically void.
The state makes exceptions for the following situations:
- Protection of trade secrets
- Managers and executives
- Members of an executive or managerial staff
- Regulation of the sale of business assets or the business itself
- Provisions to provide for the repayment of professional training and education
The restriction on individuals who must repay training costs can only last two years.
Employers generally cannot limit what employees do after leaving an organization. Workers can carefully consider contracts and compare them to the current laws to understand their rights.