Total Articles: 3
Colorado Joins Majority of Courts in Holding that Continued Employment Suffices As Consideration to Support a Non-Compete
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.
Colorado Supreme Court Rules Continued Employment Is Sufficient Consideration For Restrictive Covenant
Reversing a state court of appeals’ decision, the Colorado Supreme Court has held that an employer’s continued employment of a current at-will employee provides sufficient consideration for a non-competition agreement entered into after the inception of employment. Lucht’s Concrete Pumping, Inc. v. Horner, 09SC627 (Colo. May 31, 2011). The ruling will impact Colorado employers’ decision about how and when to implement non-competition agreements.
Colorado Supreme Court Issues Employer-Friendly Decision in Important Non-Compete Case
On May 31, 2011, the Colorado Supreme Court (sitting en banc) answered an open question in Colorado – whether continued at-will employment is sufficient consideration for a noncompetition agreement entered into after hire. In Lucht’s Concrete Pumping, Inc. v. Horner, the Court reversed the Colorado Court of Appeals and held that continued at-will employment, alone, is sufficient. Because a Colorado employer has a legal right to terminate an at-will employee at any time, the Court held, an employer’s forbearance of termination of at-will employment is adequate consideration for a noncompetition agreement executed after employment has commenced. Lucht’s Concrete Pumping, Inc. v. Horner, No. 09SC627, Colorado Supreme Court (May 31, 2011).
