Governor Polis Signs Colorado Senate Bill 25-083, Expanding Limitations on Restrictive Covenants for Medical and Dental Professionals
Governor Polis Signs Colorado Senate Bill 25-083, Expanding Limitations on Restrictive Covenants for Medical and Dental Professionals
Brett Whitley, Associate
The Rocky Mountain Employer has tracked Senate Bill 25-083 (“SB25-083”) since the Colorado Senate introduced it during the Colorado General Assembly’s 2025 Regular Session. As discussed in the Rocky Mountain Employer’s April 24, 2025, post, SB25-083 effectively bans nearly all non-compete agreements for medical professionals. [1] SB25-083 was passed by the full General Assembly as of April 21, 2025, and on June 3, 2025, Governor Polis signed the bill into law. Consequently, the use of most restrictive covenants in employment agreements with physicians, physician assistants, certified midwives, dentists, and advanced practice registered nurses entered into after August 6, 2025, will be prohibited.
SB25-083’s Elimination of Provisions Allowing for the Recovery of Damages for Breaches of Noncompete Agreements Between Physicians
Prior to SB25-083, physicians who entered into an agreement restricting their right to practice medicine could be liable for any damages in an amount that is reasonably related to the injury suffered by reason of termination of the agreement, despite any portion of such an agreement that restricted the physicians’ practice of medicine being void. In other words, though a party to a non-compete agreement with a physician could not prohibit the physician from competing with it by going and practicing medicine elsewhere, the party could enforce provisions in the non-compete agreement that called for the payment of damages by the party breaching the non-compete agreement.
However, as of August 6, 2025, physicians will no longer face the possibility of being subject to any damages that may result from the physician’s breach of a non-compete agreement restricting their right to practice medicine due to SB25-083 modifying Section 5(a) of Colorado’s non-compete statute, as previously discussed.[2]
SB25-083’s Elimination of the “Highly Compensated Employees” Exception for Covenants Not to Compete or to Solicit Customers, as Related to Medical Professionals
Additionally, prior to SB25-083’s enactment, Colorado’s noncompete statute permitted covenants not to compete or to solicit an employer’s customers, if such covenants were designed and narrowly tailored to protect an employer’s trade secrets, and the restricted employee is considered a “highly compensated employee” under the statute. SB25-083 eliminates this exemption for covenants that may appear to be aimed at protecting an employer’s trade secrets, but still restrict the practice of medicine, advanced practice registered nursing, or dentistry in Colorado. The elimination of this exemption will occur if it “prohibits or materially restricts” a “health-care provider” from continuing to practice medicine or from disclosing the health-care provider’s new professional contact information, or restricts the patient's right to choose a health-care provider.[3]
SB25-083 Narrows Certain Non-Compete Provisions Related to the Purchase and Sale of a Business
Last, SB25-083 still permits covenants not to compete that are related to the purchase and sale of a business, a direct or indirect ownership share in a business, or all or substantially all of the assets of a business that restricts competition by an owner of an interest in the business. However, SB25-083 clarifies that a minority owner of a business can only be restricted from competing for a finite amount of time, which is calculated by applying a specific formula that considers the amount of consideration received by the owner divided by the annualized cash compensation received by the owner from the business. Notably, there still may be a conflict between this exemption and SB25-083’s bar on covenants restricting a “health-care provider’s” ability to practice medicine, advanced practice registered nursing, or dentistry because it is possible that these “health-care providers” are also owners or minority owners of businesses that are subject to non-compete provisions in agreements for the sale of the business.
Employer Considerations
The passage of SB25-083 reflects the prevailing trend in Colorado, and elsewhere, of public policy disfavoring noncompete agreements. Though there may be arguably conflicting language in SB25-083 when non-compete provisions involve health-care providers whose businesses are being sold or purchased, any parties to such agreements should carefully consider whether the non-compete provisions truly restrict their right to practice medicine, dentistry, etc. and err on the side of caution by revising those provisions such that they do not. Similarly, Campbell Litigation is available to review, analyze, and modify any non-compete agreements based on the passage of SB25-083.
[1] See https://www.rockymountainemployersblog.com/blog/2025/4/24/colorado-senate-bill-25-083-expanded-limitations-on-restrictive-covenants-for-medical-and-dental-professionals. https://leg.colorado.gov/sites/default/files/documents/2025A/bills/2025a_083_rer.pdf for the full text of SB-25-083.
[2] See Colo. Rev. Stat. § 8-2-113.
[3] As discussed in the Rocky Mountain Employer’s April 24, 2025, post, the scope of the types of licensed medical professionals these provisions would apply and relate to is not entirely clear on the face of the new provisions of SB25-083. SB25-083 defines “healthcare provider” to include an individual licensed as a certified midwife, in addition to dentists, physicians, and advance practice nurses. It also defines the “practice of medicine” to include practicing as a physician’s assistant.