Colorado Severance Rights: At-Will with Restricted Non-Competes
Colorado restricts non-competes except for high-earning employees. Learn your negotiation leverage and severance rights.
Severance Mandated?
No — But Negotiable
Non-Competes
Restricted
State WARN Act
No State WARN
Typical Severance
1-3 weeks per year of service for standard employees
Colorado Employment Laws That Affect Your Severance
Understanding these CO-specific protections is the first step to negotiating a better package.
Non-Compete Salary Threshold ($130,014)
Colorado voids non-competes for employees earning less than $130,014 annually. If your salary is below this threshold, any non-compete in your severance is unenforceable. Do not trade severance for a non-compete you cannot legally enforce against.
High-Earner Non-Compete Rules
Employees earning $130,014+ can have enforceable non-competes, but only if reasonable in scope, duration, and geography. Even high earners should negotiate specific, limited restrictions.
At-Will Employment
Colorado is at-will. Employers can terminate without severance. Your leverage comes from potential litigation risk and release of claims value.
Federal WARN Act (100+ employees)
If employer has 100+ employees and failed to provide 60 days notice of layoff, they may owe back pay and benefits. Use this potential liability in severance negotiations.
Income Tax Impact
Colorado has state income tax (4.4%-5.55%). Severance is taxable. Factor in tax liability when negotiating severance amounts.
WARN Act: Colorado vs. Federal
| No State WARN | Federal WARN | |
|---|---|---|
| Employer Threshold | N/A | 100 employees |
| Notice Required | N/A | 60 days |
Key insight: Colorado has no state WARN Act. Only federal WARN applies if employer has 100+ employees and is laying off 50+ workers.
Non-Compete Agreements in Colorado
Non-Competes Are Heavily Scrutinized
Colorado strictly restricts non-compete agreements. Under Colorado Revised Statute §8-2-113, non-competes are prohibited except for employees earning at least $130,014 (2024 threshold, adjusted annually). If you earn below this threshold, any non-compete in your severance is void. Even above the threshold, non-competes must be reasonable in scope and duration.
Your Colorado Advantage
If you earn less than $130,014, any non-compete is automatically void — do not accept reduced severance for non-compete removal
Even high earners can challenge non-competes that exceed reasonable geographic or time limits
At-will status allows you to reject unfavorable severance terms without penalty
Federal WARN Act protections available if employer has 100+ employees
Red Flags in CO Severance Agreements
If your severance agreement includes any of these, you should not sign without further review.
Non-compete in severance if you earn below $130,014 (automatically void in Colorado)
Overly broad non-compete for high earners (unlimited geography, excessive duration)
Employer claiming non-competes are "standard" when you earn below threshold
Reduced severance offered in exchange for non-compete removal if below threshold
Failure to adjust threshold annually (it increases yearly)
Find Out What Your CO Severance Is Really Worth
Our AI analyzes your specific situation against Colorado laws, identifies leverage points, and shows you how much more you could negotiate. Free analysis takes 3 minutes.
Start Your Free CO AnalysisNo credit card required. Results in under 60 seconds.
Colorado Severance Rights Cheat Sheet
Get the 5 things every Colorado employee must know before signing a severance agreement. Instant delivery to your inbox.
No spam. Unsubscribe anytime.
Colorado Severance FAQ
Is my non-compete enforceable in Colorado if I earn less than $130,014?▼
What if I earn $130,014 or more — is my non-compete enforceable?▼
Is severance mandatory in Colorado?▼
What severance amount should I expect in Colorado?▼
How does the $130,014 threshold work?▼
Disclaimer: SeveranceIQ is an educational technology tool, not a law firm. The information on this page about Colorado employment laws is for general educational purposes only and does not constitute legal advice. Laws change frequently. For advice about your specific situation, consult a licensed Colorado employment attorney. Full disclaimer
Severance guides for other states: