COVENANTS NOT TO COMPETE -- "MANAGEMENT PERSONNEL"

In Colorado, covenants not to compete are void as a matter of public policy except in a few limited circumstances. C.R.S. sec. 8-2-113(2). One of the exceptions is for "executive and management personnel and officers and employees who constitute professional staff to executive and management personnel." However, there is no statutory definition of "management personnel," and the Colorado courts have not provided clear guidance for who is "management personnel."

A recent Colorado Court of Appeals decision, DISH Network Corp. v. Altomari, Case No. 08CA1741 (June 25, 2009), has shed some light on the management level and authority a person must possess for him or her to be deemed "management personnel" for purposes of this exception. Altomari was a "mid-level manager" at DISH Newtork having "supervisory authority over fifty out of DISH's 22,000 employees" and some decision-making authority. The trial court concluded that Altomari was not "management personnel" because he was not a "key person at the heart of the business." The Court of Appeals rejected the trial court's narrow interpretation of the statute and ruled that the covenant not to compete was not void and could be applied to Altomari. The Court reasoned that the common meaning of the word "management" is not so limited as to include only the top level of management of a company and that excluding persons who "direct, control, and supervise" other employees within a company inappropriately narrows the statutory language and is inconsistent with the plain meaning of term.

Note that the Court of Appeals' opinion has not been released for publication, and therefore a petition for rehearing or a petition for cert. to the Colorado Supreme Court may be pending. Stay tuned!

Post By Brent W. Houston, Esq.