Ever since a reference to a “legislative ban on physician non-compete agreements” was made in the Colorado attorney general’s Stipulated Consent Agreement and Judgment with U.S. Anesthesia Partners of Colorado, Inc., filed Feb. 26, 2024, health law practitioners in Colorado have waited to see if the Colorado General Assembly would enact such a ban. On April 21, 2025, the General Assembly made good on the promised legislative ban when it enacted Senate Bill 25-083. If the governor signs it into law, SB 25-083 would broadly impact the use of most restrictive covenants in agreements with physicians, physician assistants, dentists, and advanced practice registered nurses entered or renewed after SB 25-083’s expected effective date of Aug. 6, 2025.
Prior to SB 25-083, subsection (5)(a) of the statute had rendered “void” a restrictive covenant that “restricts the right of a physician to practice medicine,” but permitted enforcement of “provisions that require the payment of damages in an amount that is reasonably related to the injury suffered by reason of termination of the agreement,” including “damages related to competition.” That is, under subsection (5)(a) of the statute prior to SB 25-083’s enactment, it was not possible to obtain an injunction preventing a physician from going to work for a competitor, but it was possible to enforce a damages provision.
SB 25-083 deletes altogether the prior language in subsection (5)(a) of the statute, thereby eliminating the prior exception for physician restrictive covenants. Instead, subsection (5)(a) now provides that “[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.”
Additionally, prior to SB 25-083, the statute also had permitted restrictive covenants designed to protect trade secrets or to bar solicitation of customers in certain limited circumstances. In SB 25-083, the General Assembly exempted from the trade secret and non-solicitation provisions any “covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry.” A covenant is “deemed” to be as much if it “prohibits or materially restricts a health-care provider” from disclosing to existing patients prior to the provider’s departure the following information: “(a) the health-care provider’s continuing practice of medicine; (b) the health-care provider’s new professional contact information; or (c) the patient’s right to choose a health-care provider.” As a result, a covenant not to compete that is deemed to restrict the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry in the manner SB 25-083 defines cannot instead be labeled and enforced as a provision to protect trade secrets or to bar the solicitation of customers.1
To which types of licensed professionals these provisions would relate is not entirely clear. Although SB 25-083 refers to “a covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry,” it also defines “health-care provider” to include an individual licensed as a certified midwife. It also defines the “practice of medicine” to include practice as a physician assistant.
Finally, the General Assembly revised and narrowed the portion of the statute permitting a restrictive covenant related to purchasing and selling a business, a direct or indirect ownership share in a business, or all or substantially all of the assets of a business. Specifically, the General Assembly narrowed the duration of years an individual who “owns a minority ownership share of the business and who received their ownership share in the business as equity compensation or otherwise in connection with services rendered” may be subject to a restrictive covenant, according to a specific formula set forth in SB 25-083. Notably, however, the General Assembly did not except from this provision any “covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry,” as it did with the trade secrets and non-solicitation provisions. Accordingly, a restrictive covenant entered in connection with the sale of a medical or dental practice, or the like, may still be permissible under the statute.
By the terms of SB 25-083, the changes to the statute would apply to only covenants not to compete entered or renewed on or after the bill’s effective date of Aug. 6, 2025. This means that SB 25-083 should not be interpreted to invalidate restrictive covenants in agreements that predate Aug. 6, 2025. However, going forward, Colorado employers using restrictive covenants in their agreements with “health-care providers” should evaluate whether contract templates comply with the new provisions of SB 25-083.
1 Nothing in SB 25-083 authorizes the misappropriation of trade secrets.