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SB 25-083

Limitations on Restrictive Employment Agreements

2025 Regular Session Introduced by Andy Boesenecker and 14 co-sponsors

Colorado SB 25-083 limits health‑care noncompetes, bans post‑departure patient‑contact restrictions, and broadens business‑sale ownership exemptions (effective Aug 6, 2025).

Governor Signed
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Bill Summary · SB 25-083

SB 25-083 — Limitations on Restrictive Employment Agreements

Status: Governor signed (June 3, 2025). Effective date: August 6, 2025 (applies to covenants entered into or renewed on or after that date). Sponsors: Sen. Daugherty, Frizell; Rep. Brown, Garcia Sander (with multiple cosponsors).

Purpose / Intent

To narrow the circumstances in which employers may use non‑compete and non‑solicitation agreements, with special protections for health‑care providers, and to clarify how non‑competes related to business purchases and ownership shares may be structured and limited.

Key provisions

  • Removes the exception that formerly allowed highly compensated workers to be subject to non‑compete and certain non‑solicit covenants when those covenants would restrict the practice of:

    • Medicine (including physician assistants and physician assistants practicing under statute),
    • Advanced practice registered nursing,
    • Midwifery, or
    • Dentistry. In short: non‑competes/nonsolicits that restrict those practices are not covered by the highly compensated exemptions and thus are effectively prohibited.

  • Prohibits any agreement that prohibits or materially restricts a departing health‑care provider from telling patients (to whom the provider had been providing consultation or treatment before departure):

    • That the provider continues to practice,
    • The provider’s new professional contact information, or
    • The patient’s right to choose a health‑care provider. (The statute expressly defines such restrictions as covenants that restrict the practice of medicine/APRN/midwifery/dentistry.)

  • Expands the business‑sale exemption for non‑competes:

    • Explicitly covers not only sale of a business or its assets but also direct or indirect ownership shares and partial sales.
    • For a minority owner who received ownership as equity compensation (or in connection with services), a permissible non‑compete’s duration (in years) is capped by a formula: total consideration received by the individual from the sale ÷ the individual’s average annualized cash compensation from the business (including ownership income) over the preceding two years or the period affiliated with the business, whichever is shorter.

  • Preserves enforceability of other lawful contract provisions (e.g., damages provisions) that do not include unlawful restrictive covenants; for physician agreements, covenants restricting practice upon termination are void but other contractual remedies may remain available.

Who is affected

  • Health‑care providers (physicians, APRNs, certified midwives, dentists) and their employers/medical or dental practices.
  • Employers and employees generally, particularly those negotiating ownership interests, equity compensation, or sale transactions.
  • Legal, HR, and contracting professionals responsible for drafting employment, purchase, and shareholder agreements in Colorado.

Fiscal and administrative impact

  • Legislative Council fiscal notes (initial and final) project no direct state revenue or major expenditure impacts.
  • Minimal ongoing workload increase for the Colorado Department of Labor and Employment to update rules/guidance and respond to public inquiries. No appropriation required.

Procedural / timeline notes

  • Introduced in Senate: January 23, 2025.
  • Passed both chambers (final House concurrence April 21, 2025); sent to Governor May 8, 2025; signed June 3, 2025.
  • Effective August 6, 2025 (assuming no referendum); applies to covenants entered or renewed on/after that date.

For statutory placement: amends Colorado Revised Statutes section 8‑2‑113 (employment non‑compete and nonsolicitation rules).

Compiled from official sources — confirm details with the bill’s official record.

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