New Year, New State Minimum Compensation Thresholds For Restrictive Covenants

For many employers, a new year is a new opportunity to update policies, procedures, and agreements—including restrictive covenants. In addition to ensuring compliance with applicable state requirements as to timing, consideration, and restrictions, companies need to be aware of applicable compensation minimums for employees being asked to sign noncompetition and nonsolicitation agreements. With the start of the new year, many states have increased minimum compensation floors for such employees.

• Colorado. The new minimum highly compensated employee threshold is $112,500 for 2023. Noncompetes are prohibited for employees who do not meet the highly compensated employee threshold. Nonsolicitation agreements are prohibited for employees who do not earn at least $67,500, which is 60 percent of the highly compensated employee minimum.