Colorado Joins Majority of Courts in Holding that Continued Employment Suffices As Consideration to Support a Non-Compete

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As with any contract, to be enforceable, a post-employment restrictive covenant must be supported by consideration. In some states, if a restrictive covenant is signed by an at-will employee after the inception of employment, the covenant must be supported by new and independent consideration (such as a promotion or a raise in salary). In other states, the promise of continued employment—even to an at-will employee—constitutes sufficient consideration. Because the law varies from state to state, employers with nationwide operations must be aware of each state’s law regarding the validity of restrictive covenants signed by employees after the employee has commenced employment.

The Colorado Supreme Court recently fell in line with the clear majority position among those states that have addressed the question, holding that continued employment alone is sufficient consideration. In Lucht’s Concrete Pumping, Inc. v. Horner, the Court explained: [w]e hold that an employer that forbears from terminating an existing at-will employee forbears from exercising a legal right, and that therefore such forbearance constitutes adequate consideration for a noncompetition agreement.” (A copy of the court’s opinion is available in pdf format below.)

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