A recently passed law makes significant adjustments to Colorado’s employment restrictive covenant statutes, particularly in the cases of non-compete and non-solicitation agreements for certain healthcare providers.

Senate Bill 083, sponsored by Sens. Lindsey Daugherty, D-Arvada, and Lisa Frizell, R-Castle Rock, and Reps. Kyle Brown, D-Louisville, and Lori Garcia Sander, R-Eaton, ban non-compete agreements for doctors, nurses, and dentists. It also prohibits non-solicitation agreements, allowing those medical professionals to bring their patients with them to their new practice.

According to Tom Carroll of Littler Mendelson, a labor law firm, non-competes are necessary in specific industries to protect trade secrets. However, the medical community has criticized the practice due to its potential for financial penalties for noncompliance, which could deter doctors from bringing patients with them to their new practice.

The bill also voids any covenants that prohibit or restrict a healthcare provider from notifying their patients about where they will be relocating to, sharing their new office’s contact information, and informing the patient of their right to choose a provider.

There are also several changes for minority-interest owners, or individuals who hold less than 50% ownership of a business. Under the bill, a restrictive covenant tied to the sale of a healthcare business is only enforceable if the compensation provided to the seller meets a certain threshold based on the seller’s income and ownership interest.

SB 083 received bipartisan support in both the House and Senate, passing on a 29-5 vote in the Senate and a 56-8 vote in the House.

Other professionals in the health care industry, such as hospital executives, are not covered by the legislation.

Senate Bill 083 is not retroactive and only applies to agreements entered into or renewed after Aug. 6.