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July 8, 2025
Colorado enacted a law, effective August 6, 2025, to promote mobility for physicians, advanced practice registered nurses, physician assistants, dentists, and certified midwives. See Colorado Senate Bill 25-083.
Currently, Colorado law states that any non-competition (non-compete) provision from an employment, partnership, or corporate agreement with a physician (unless it deals with buying or selling a business) is void if it restricts the physician’s right to practice medicine upon termination of the agreement. However, current law still allows for the assessment of damages against a physician for termination of the agreement, even when such damages relate to competition. The new law removes this damages carve-out.
As to buying or selling a business, the new law limits the duration of a non-compete for individuals with a minority ownership interest in the business using a specific formula that divides the total consideration that the minority owner received from the sale by the average annualized compensation that the minority owner received from the business over the preceding two years.
Currently, Colorado law includes an exemption allowing reasonable non-competes or non-solicitation agreements with individuals making at least 60% of the threshold for highly compensated workers when such agreements are used for protecting a business’s trade secrets. The new law excludes health care providers from this exemption.
In addition to promoting physician mobility, the new law promotes patient mobility by ensuring that health care providers can tell patients where they are working. Specifically, restrictive covenants cannot prohibit or materially restrict a departing health care provider from disclosing to current patients that their practice will continue elsewhere, their new contact information, and the patient’s right to choose their health care provider.
The new law applies only to covenants not to compete entered into or renewed on or after the law’s effective date, August 6, 2025. Prior to that date, health care employers should review their existing employment agreements and templates to ensure compliance with the new law. Not doing so contains much risk, as Colorado law already provides for civil and criminal penalties for entering into or for attempting to enforce a non-compete that the statute renders void.
The author of this article, Patricia Tsipras, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, Colorado, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
