"Management" Exception Construed
Under the Colorado non-compete statute, non-competes are void unless they fall within one of the designated exceptions. One of those exceptions is for "executive and management personnel".
Another decision recently was entered on this "management" exception when the Colorado Court of Appeals issued its June 2009 decision in Dish Network v. Altomari. In Dish Network, the trial court, Judge Habas of the Denver District Court, had denied Dish Network's motion for preliminary injunction in part. Judge Habas had found that the employee was not "management personnel" under the non-compete statute. The Court of Appeals reversed as it found that Judge Habas had misconstrued what was meant by the "management" exception. This exception, according to the Court of Appeals, was not limited to "key personnel at the heart of the business".
In ruling that the exception applied, the Court of Appeals noted, at different points in the opinion, that the employee was a director of Dish Network, that the employee was "at the top of the compensation scheme", that the employee "directly" supervised fifty out of Dish's 22,000 employees, that the employee's division had a ten million dollar budget, and that the employee "was employed in a decision-making capacity, and had a certain level of autonomy".
In reaching its ruling, the Court of Appeals acknowledged that the Colorado Supreme Court had not considered this exception and "other courts that have considered the exception have not provided a clear definition for who qualifies as 'executive and management personnel'". It is worth questioning whether this decision contributes substantially to the definition of this exception. Most cases, after all, won't involve employees who "directly supervise" fifty employees and who manage a ten million dollar budget.
The decision underscores how difficult it can be for a court to determine whether an employee falls within the "management" exception. By underscoring this difficulty, the decision demonstrates how important equitable considerations can be in determining the scope of any exception to the general rule that non-competes are not enforceable.
