What is a Colorado MSA?

A Colorado Master Services Agreement (MSA) is a foundational contract between a service provider and a client, setting the terms for all future transactions. This agreement is crucial for businesses operating in Colorado as it outlines payment terms, liability, intellectual property rights, and dispute resolution mechanisms, streamlining subsequent project-specific agreements.

Definition: A Colorado Master Services Agreement is a comprehensive contract that governs the relationship between two parties, typically a client and a service provider, within the state of Colorado. It establishes the legal framework for all future projects, covering aspects like payment, liability, and intellectual property rights. Instead of drafting a new contract for each engagement, parties sign a single MSA and attach Statements of Work (SOWs) for individual tasks.

Why You Cannot Use a Generic MSA in Colorado

Using a generic MSA template in Colorado can expose businesses to significant legal risks due to specific state laws that govern worker classification, non-compete agreements, and intellectual property rights. Here’s why a Colorado-specific MSA is essential.

Worker Classification Rules

In Colorado, worker classification is primarily governed by common law principles, which focus on the degree of control an employer has over the worker. The Colorado Department of Labor and Employment (CDLE) emphasizes the importance of the relationship's nature, often using a multi-factor test similar to the IRS guidelines. Misclassification can lead to severe penalties, including back taxes, fines, and mandatory employee benefits. According to Colorado Revised Statutes § 8-70-115, misclassification can result in penalties of up to $5,000 per misclassified worker.

Non-Compete Enforceability

Non-compete agreements in Colorado are generally enforceable but are subject to strict limitations. Under Colorado Revised Statutes § 8-2-113, non-competes are only valid in specific circumstances, such as the protection of trade secrets, recovery of training expenses, or executive and management personnel. The agreement must be reasonable in scope, duration, and geographic area. Alternatives to non-competes include non-disclosure agreements (NDAs) and non-solicitation clauses, which can provide similar protections without the risk of unenforceability.

IP/Work-for-Hire Considerations

In Colorado, intellectual property assignments must be clearly outlined in the MSA to avoid disputes. The state follows federal guidelines for work-made-for-hire, meaning that unless explicitly stated, the creator retains the IP rights. To ensure compliance, the MSA should include clear language assigning IP rights to the client, especially for creative works. This prevents any ambiguity regarding ownership and ensures the client retains full rights to the work produced.

What's Included in This Template

Flexible SOW Structure

The Colorado MSA template includes a flexible Statement of Work (SOW) structure, allowing for specific project details to be attached to the overarching agreement, simplifying future engagements.

Colorado-Specific Indemnification

The indemnification clause is tailored to Colorado's legal standards, including mutual hold-harmless provisions and exceptions for gross negligence or intentional misconduct.

Dispute Resolution and Venue

Dispute resolution is set to occur in Denver, Colorado, ensuring that any legal proceedings take place within the state, reducing travel and legal costs for local businesses.

• 6-year statute of limitations for contracts (Colorado Revised Statutes § 13-80-103.5)
• Interest rate on late payments (Colorado Revised Statutes § 5-12-102)
• Data privacy compliance (Colorado Revised Statutes § 6-1-1301 et seq.)

Who Needs This Document?

How to Use This MSA Template

Step 1: Define the Parties

Clearly identify the legal names and entity types of both the service provider and the client. Use the names as registered with the Colorado Secretary of State.

Step 2: Set the Term

Determine whether the agreement will be for a fixed term or automatically renew. Evergreen agreements continue until terminated by either party.

Step 3: Attach Your First SOW

Do not include project-specific details in the MSA itself. Use the attached SOW template to outline the scope, timeline, and payment terms for each project.

Step 4: Execute the Agreement

Both parties should sign the MSA once. Future projects will only require signing a new SOW, with the MSA terms automatically applying.