Restrict Governmental Nondisclosure Agreements

The act prohibits the state, counties, cities and counties, municipalities, school districts, and any of their departments, institutions, or agencies (public employers) from making it a condition of employment that an applicant for employment or current or past employee (employee) executes a contract or other form of agreement that prohibits, prevents, or otherwise restricts the employee from disclosing factual circumstances concerning the employee's employment with the public employer (nondisclosure agreement) unless the nondisclosure agreement is necessary to prevent disclosure of:

• The employee's identity, facts that might lead to the discovery of the employee's identity, or factual circumstances relating to the employment that reasonably implicate legitimate privacy interests held by the employee who is a party to the agreement if the employee elects to restrict such disclosure;
• Data, information, including personal identifying information, or matters that are required to be kept confidential by federal law or regulations, the state constitution, state law, state regulations, state rules, or a court of law or as attorney-client privileged communications, privileged work product, communications related to a threatened or pending legal or administrative action, or materials related to personnel or regulatory investigations by the employer;
• Information bearing on the specialized details of security arrangements or investigations, including security arrangements for or investigations into elected officials or other individuals, physical infrastructure, or cybersecurity;
• Information derived from communications of the employer related to threatened or pending legal or administrative action;
• Discussions that occur in an executive session authorized by the "Colorado Open Meetings Law";
• Trade secrets or other confidential or sensitive information provided to or made accessible to the employee by a current or prospective contractor, vendor, or grantee or as part of a public-private partnership or entity working with the state as part of an economic development activity;
• Trade secrets or information derived from trade secrets or proprietary information of the employer;
• Information and records not subject to disclosure under the "Colorado Open Records Act" (CORA); or
• Trade secrets owned by the employer.

For a public employer that is the state or a department, institution, or agency of the state, a nondisclosure agreement is also allowed if it is necessary to prevent disclosure of:

• Nonpublic and confidential labor relations positions and strategies;
• Attorney work product;
• Vendor lists and vendor preferences;
• State business-related information received from a third party that the third party has designated confidential; or
• Information and matters related to state active duty orders of national guard soldiers and airmen and personnel disputes subject to the jurisdiction of the United States department of defense;

For a public employer that is a county, a city and county, a municipality, or a department, institution, or agency of a county, a city and county, or a municipality, a nondisclosure agreement is also allowed if it is necessary to prevent disclosure of:

• Trade secrets or other confidential or sensitive information provided to or made accessible to the employee by an employer's current or prospective customer, contractor, lessee, lessor, business partner, or affiliate; or
• Trade secrets or other confidential or sensitive information provided to or made accessible to the employee by a purchaser or seller of property that is engaged in negotiations or under contract with the employer.

The act specifies that any provision in any contract or agreement that amounts to a nondisclosure agreement is deemed to be against public policy and unenforceable against an employee of a public employer who is a party to the contract or agreement unless the provision is intended to prevent disclosure of any information or matters for which an exception to the general prohibition against nondisclosure agreements for the public employer applies.

The act prohibits a public employer from taking any materially adverse employment-related action, including withdrawal of an offer of employment, discharge, suspension, demotion, or discrimination in the terms, conditions, or privileges of employment, against an employee on the grounds that the employee does not enter into a contract or agreement deemed to be against public policy and unenforceable under the act. The act also states that the taking of a materially adverse employment-related action after an employee has refused to enter into such a contract or agreement is prima facie evidence of retaliation and that any public employer that enforces or attempts to enforce a contract or agreement provision deemed by a court to be against public policy and unenforceable under the act is liable for the employee's reasonable attorney fees and costs in defending against the action.

The act requires an action to enforce a provision of the act to be brought in the district court for the district in which the employee is primarily employed. A settlement agreement between an employer that is subject to the act and an employee of the employer must be signed by both the employer and the employee.

A nondisclosure agreement must not prohibit the release of information required to be released under CORA. In addition, a nondisclosure agreement executed by a public employer that is the state or a department, institution, or agency of the state and an employee must state that state employees are protected from retaliation for disclosure of information about state agencies that are working outside the public interest. A public employer may require an employee to enter into a nondisclosure agreement with a third party in the employee's official capacity and on behalf of the employer.

APPROVED by Governor June 2, 2023

EFFECTIVE August 7, 2023

NOTE: This act was passed without a safety clause and takes effect 90 days after sine die.
(Note: This summary applies to this bill as enacted.)