An Underused Arrow in the GC’s Quiver: Cease-and-Desist Letters to Former Employees

When a former employee leaves, companies hope that matter ends there. But in many cases, the real risk begins after the departure. From soliciting your workforce and misusing confidential data to posting defamatory claims online or threatening current staff, former employees can create serious legal and operational challenges. In those moments, a cease-and-desist (C&D) letter is a powerful tool in your legal arsenal. Used strategically, it may stop harmful conduct without costly litigation. Used carelessly, however, it can create regulatory and reputational risk of its own. Here is what every general counsel should know.

Why C&D letters matter

A C&D letter formally notifies a former employee that their conduct is unlawful and demands that it stop immediately. It also creates a written record of the company’s objection, which can become critical if litigation follows, particularly in proving damages. In many cases, however, a well-crafted letter resolves the matter before litigation becomes necessary. Former employees, particularly those without legal counsel, often reconsider their actions when faced with a formal legal demand from corporate counsel.

Too often, we find that general counsels use C&D letters for intellectual property infringement or copyright misuse scenarios, but forget that a good C&D letter is a useful arrow in your quiver when it comes to addressing a former disgruntled or bad actor employee.

Common employment scenarios that warrant a C&D letter include:

• Violation of noncompete or non-solicitation agreements
• Theft or misuse of confidential and proprietary information
• Defamation or disparagement of the company or its leadership
• Harassment or threats directed at current employees
• Unauthorized use of pricing information, templates, client lists, or trade secrets

Consider this scenario that illustrates precisely why general counsel should have a C&D protocol ready to deploy.

A private company recently discovered that a former employee had embarked on a multi-front campaign against the business almost immediately after her resignation. First, she was actively encouraging current employees to leave the company and join her new competing venture, which directly violated a non-solicitation agreement she had signed when she started with the company. Second, she had posted a false and misleading Google review of the company, misrepresenting the viability of its core product and publishing inaccurate information about its customer pricing. Third (and perhaps most seriously), a review of her email activity in the final days of her employment revealed that she had forwarded company templates and confidential customer contact information to her personal email before resigning.

The company had multiple, well-documented legal bases for action, and further damage was imminent. This was a textbook case for a C&D letter.

But when deciding whether to move forward with a C&D, a company should first consider the legal and practical implications.

Step 1: Do you have a legal basis to issue the C&D?

Before drafting a single word, confirm that you have a legally defensible reason to send the letter. Ask whether the former employee has breached a contract, such as an enforceable non-solicitation, non-disclosure, or non-compete agreement, violated a common law duty of loyalty, misappropriated trade secrets under state or federal law, or committed a tort such as defamation or tortious interference. In the example above, all of these boxes were checked, but often the facts do not rise to the level of a legal basis, or state laws create private rights of action for such letters, such as when a company threatens to enforce an unlawful non-compete. Without a clear legal foundation, a C&D letter can expose the company to regulatory enforcement actions, legal claims, or bad PR.

Step 2: What is the ask?

Be specific and comprehensive in your demands. In the scenario above, the right answer was all of the above: immediately cease soliciting company employees; remove the false and defamatory Google review; return or certifiably destroy all company templates, customer data, and proprietary information in her possession; and refrain from using any of that information in connection with her competing business. Vague demands invite non-compliance and undermine your position if the matter proceeds to litigation. Always include a response deadline and open the phone line for communication.

Step 3: Consider the PR factor

This is a step many companies overlook. In today’s environment, former employees routinely photograph C&D letters and post them to social media, sometimes generating significant public sympathy for themselves and criticism of the company. Your letter may very well become a public document, so draft it accordingly.

This does not mean softening your legal demands, but rather being intentional about your messaging. If the conduct involves threats to current employees, consider including language that speaks to the broader audience: “This company takes the safety of its workforce and the integrity of its workplace culture seriously, and we will not tolerate conduct that threatens either.” A well-toned letter can help contain reputational risk before a dispute escalates publicly.

Step 4: If the C&D gets no reaction, do you proceed with litigation?

Not every refusal to comply warrants a lawsuit, and general counsel must conduct a sober cost-benefit analysis. Consider the following:

• What are your actual damages? Consider lost clients, diverted employees, and misappropriated trade secrets or any other quantifiable damages.
• What are your opportunity costs? Litigation consumes internal resources, management time, and focus.
• What are your legal fees relative to your likely recovery? Or are you pursuing it as a matter of principle?
• What is the ultimate outcome that you are trying to achieve? Injunctive relief to stop ongoing harm is often more valuable than a damages judgment against a former employee with limited assets.
• Sometimes proceeding aggressively is the right answer. Other times, the C&D letter alone accomplishes the goal of stopping the harmful conduct, and further escalation is unnecessary.

Abuse and overuse of C&D letters

General counsel must also be mindful of the legal and regulatory risks of overuse of C&D letters. The Federal Trade Commission (FTC)’s recent enforcement action against Rollins, Inc., one of the largest pest-control companies in the United States, which operates more than 700 locations with over 18,000 employees, serves as a stark warning.

Rollins required all newly hired employees, regardless of role, to sign non-compete agreements prohibiting them from working in the pest-control industry within a 75-mile radius of their assigned location for two years following their departure. There was no individualized assessment of whether employees actually had access to trade secrets or occupied roles that warranted such restrictions.

According to the FTC, Rollins regularly issued threatening C&D letters to these former employees, including many pest-control technicians, to enforce agreements that were likely unenforceable from the outset. The FTC found that Rollins exploited its power imbalance over these workers, who often could not afford counsel to respond to the C&D letters, thereby using the intimidation of formal legal demands to scare them away from competing jobs they had every legal right to take.

Consider carefully

The lesson for general counsel is clear: a C&D letter is a legal tool, not a leverage tactic. Before sending one, confirm not only that a restrictive covenant exists on paper, but that it is actually enforceable given the employee’s role, the scope of the restriction, and the law of the applicable jurisdiction.

The C&D letter, deployed thoughtfully and grounded in sound legal analysis, remains one of the most cost-effective tools available to companies dealing with problematic former employees. The key is a disciplined approach: confirm your legal basis, articulate your demands clearly, consider the public dimension of your letter, and make strategic decisions about escalation with clear eyes.

And always remember that the goal is to protect your business, not to intimidate workers out of rights they lawfully hold. Finally, never hesitate to have a second set of eyes on your C&D decision by having outside counsel review the basis, content, and process.