Colorado Senate Bill 25-083 – Expanded Limitations on Restrictive Covenants for Medical and Dental Professionals
Colorado Senate Bill 25-083 – Expanded Limitations on Restrictive Covenants for Medical and Dental Professionals
Bayan Biazar, Associate Attorney
As part of the Colorado General Assembly’s 2025 Regular Session, the Colorado Senate introduced a bill—Senate Bill 25-083 (“SB25-083”)—that would effectively ban nearly all non-compete agreements for medical professionals. [1] SB25-083 was passed by the full General Assembly as of April 21, 2025, and if Governor Polis signs the bill into law, the use of most restrictive covenants in employment agreements with physicians, physician assistants, certified midwives, dentists, and advanced practice registered nurses entered into after the bill’s August 6, 2025, effective date will be prohibited.
SB25-083’s Elimination of Provisions Allowing for the Recovery of Damages for Breaches of Noncompete Agreements Between Physicians
Currently, Section 5(a) of Colorado’s noncompete statute[2] provides that restrictive covenants that “restrict the right of a physician to practice medicine” are void. The statute does, however, allow for the enforcement of provisions in employment agreements between physicians and employers for the recovery of damages relating to injuries which result from the termination of employment agreements, including damages resulting from competition. In other words, under the current version of the statute, an employer cannot enjoin a physician from working for a competitor, but employers may still possibly recover damages resulting from that competition if the employment agreement allows for it.
If signed into law, SB25-083 will do away with these provisions entirely. SB25-083 changes 5(a) to read: “A provision of an employment agreement or any other agreement enforceable at law that does not include an unlawful restrictive covenant remains enforceable and subject to any damages or equitable remedy otherwise available at law.” Accordingly, SB25-083 effectively closes the loophole which currently allows employers to seek damages resulting from a physician’s competitive activities in contravention of an employment agreement.
SB25-083’s Elimination of the “Highly Compensated Employees” Exception for Covenants Not to Compete or to Solicit Customers, as Related to Medical Professionals
Currently, Colorado’s noncompete statute permits covenants not to compete or to solicit an employer’s customers if such covenants are 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 “highly compensated employees” exemption for covenants that may ostensibly be designed for the protection of trade secrets, but which nonetheless restrict an employee’s practice of medicine, dentistry, or advance practice nursing. Accordingly, under SB25-083, if a covenant “prohibits or materially restricts a healthcare provider” from disclosing the following information: “the healthcare provider’s continuing practice of medicine; the healthcare provider’s new professional contact information; or the patient’s right to choose a medical provider;” it is prohibited under SB25-083 regardless of whether the provider is a “highly compensated employee” or not.[3]
SB25-083 Also Curtails Certain Non-Compete Provisions Related to the Purchase and Sale of a Business
One remaining exemption to Colorado’s prohibitions against covenants not to compete which has remained largely untouched for years is the statute’s exemptions for covenants entered into as part of the purchase or sale of a business. Now, if signed into law, SB25-083 will narrow this exemption to set a limit on the length of any covenants not to compete applied to minority owners of a sold/purchased business. SB25-083 sets forth a specific formula which calculates the maximum duration of any covenant not to compete that may be applied to a minority owner, roughly premised on the amount of consideration received by the owner divided by the annualized cash compensation received by the owner from the business. Notably, notwithstanding SB25-083’s primary focus on prohibiting restrictive covenants which interfere with the practice of medicine, dentistry, etc., the bill does not otherwise prohibit restrictive covenants relating to the purchase or sale of a business as applied to physicians, medical practices, etc.
Employer Considerations
As of today, SB25-083 is currently awaiting the Governor’s signature. If signed into law, the changes to the statute would only apply to covenants not to compete which are entered into on or after August 6, 2025. Going forward, Colorado employers who are contemplating the use of covenants not to compete with their healthcare providers should evaluate whether their contracts comply with the new changes made by SB25-083. Campbell Litigation will continue to monitor this bill and others as they move their way through the legislative process.
[1] See 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] 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.