You Just Received a Demand Letter From Your Old Employer. Now What?

It usually arrives by certified mail and email on the same afternoon, on letterhead, addressed to you and copied to your new employer. It recites your non-compete, asserts that you are violating it, demands that you resign your new position immediately, and gives you a deadline measured in days. It threatens injunctive relief, damages, and attorney’s fees.

Two reactions are equally dangerous: panic and dismissal. A demand letter is an opening position, not a court order, and many are written to intimidate rather than to litigate. But it is also a real signal of legal exposure, and what you do in the first week often determines how the dispute ends.

The First 72 Hours

Do not respond substantively, and do not let your new employer respond for you. Anything you write becomes evidence, and an off-the-cuff denial that turns out to be wrong is worse than silence. Preserve everything: the letter, your agreements, your offer letters, your emails. If you have any document-retention obligation, honor it. Deleting files after receiving a demand letter is the single most damaging thing you can do, because spoliation (the legal term for destroying evidence) converts a defensible case into an indefensible one and hands your former employer the narrative.

Then take inventory honestly. Do you have any company documents, customer lists, pricing files, or data on a personal device or cloud account? If so, tell your lawyer immediately, before you do anything about it. Returning materials the right way, documented and through counsel, is very different from quietly deleting them. Note also that trade-secret misappropriation claims travel alongside non-compete claims and often carry more risk, because they do not depend on the enforceability of the covenant at all.

Finally, find the actual agreement. Clients are frequently surprised to learn that what they signed is not what the demand letter describes: the restriction is shorter, narrower, limited to solicitation rather than competition, or was never signed at all.

The Federal Backdrop (in brief)

If you were counting on the Federal Trade Commission to void your non-compete, stop.

The FTC’s 2024 Non-Compete Clause Rule never took effect; it was set aside in litigation, the agency abandoned its appeals, and on February 12, 2026 the FTC removed 16 C.F.R. Part 910 from the Code of Federal Regulations. The agency still challenges individual arrangements it views as anticompetitive, but your rights are now determined almost entirely by state law, and the four states below diverge sharply.

New Jersey

New Jersey has no non-compete statute. Enforceability turns on the common-law test from Solari Industries, Inc. v. Malady, 55 N.J. 571 (1970), and Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971): the restriction must protect a legitimate business interest, impose no greater hardship than necessary, and not injure the public. Protecting an employer against ordinary competition is not a legitimate interest; protecting trade secrets, confidential information, and customer relationships is.

The critical wrinkle is that New Jersey courts can “blue pencil,” meaning a judge may narrow an overbroad covenant and enforce the trimmed version rather than strike it entirely. An unreasonable agreement is therefore not automatically a worthless one, which is precisely why an aggressive letter about a facially overbroad covenant still deserves a serious response.

Pennsylvania

Pennsylvania applies a similar common-law reasonableness analysis and adds a consideration requirement that trips up many employers. In Socko v. Mid-Atlantic Systems of CPA, Inc., 633 Pa. 555 (2015), the Pennsylvania Supreme Court held that a non-compete signed after employment begins must be supported by new and valuable consideration, a promotion, a raise, or another tangible benefit, and that continued employment alone will not do. The Court further held that boilerplate reciting an intent to be legally bound under the Uniform Written Obligations Act does not cure the defect. If your employer handed you a restrictive covenant two years into the job with nothing new in exchange, that is a real defense.

New York

New York also has no statute. The governing standard is BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999): a covenant is enforceable only to the extent it is no greater than necessary to protect a legitimate interest, does not impose undue hardship, and does not harm the public. New York courts recognize a narrow set of legitimate interests, principally trade secrets, confidential information, client relationships the employee did not bring with them, and truly unique or extraordinary services. Many boilerplate covenants imposed on ordinary employees fail that test, and New York courts may enforce a covenant only partially.

Legislation has repeatedly come close. Governor Hochul vetoed a near-total ban in December 2023. A narrower successor, S9759, passed the Senate on June 3, 2026 by a 40 to 21 vote, and would bar non-competes for everyone except very highly compensated individuals and certain business sellers, while banning them for health-related professionals at any compensation level. As of this writing the Assembly companion had not passed and the bill is not law, and it would not apply retroactively in any event. Do not plan around it.

Illinois

Illinois is the outlier, because it has a statute with hard floors. Under the Illinois Freedom to Work Act (820 ILCS 90/), a non-compete is void and unenforceable against an employee earning $75,000 per year or less, and a non-solicitation covenant is void against an employee earning $45,000 or less. Those thresholds rise to $80,000 and $47,500 on January 1, 2027. The Act also requires the employer to give you at least 14 calendar days to review the agreement and to advise you in writing to consult an attorney; Illinois courts separately require adequate consideration, generally understood as roughly two years of continued employment or another substantial benefit. The Act bars covenants for certain construction and government workers outright, and a prevailing employee may recover attorney’s fees.

Certain Professions Get Special Protection

Pennsylvania is now the strongest example. The Fair Contracting for Health Care Practitioners Act (Act 74 of 2024), effective January 1, 2025, makes a non-compete entered into after December 31, 2024 with a medical doctor, doctor of osteopathy, certified registered nurse anesthetist, certified registered nurse practitioner, or physician assistant void as against public policy, with a narrow exception: the covenant may be enforced only if it runs no more than one year and the practitioner was not dismissed by the employer. Sale-of-business and ownership-interest transactions are carved out, and employers face patient-notification duties on departure. Agreements signed before 2025 are unaffected.

New Jersey offers less protection than practitioners often assume. It has no physician-specific statute, and in Karlin v. Weinberg, 77 N.J. 408 (1978), the Supreme Court expressly declined to hold physician covenants unenforceable per se. What New Jersey gives physicians instead is the public-interest prong, which does real work. In Community Hospital Group, Inc. v. More, 183 N.J. 36 (2005), the Court reaffirmed Karlin but reduced a neurosurgeon’s covenant geographically, because enforcing it as written would have harmed patient access to care. The lesson is that a New Jersey physician usually fights over scope, not validity.

New York currently has no physician carve-out, though the pending bill would create a broad one covering health-related professionals at any pay level. Illinois has no healthcare-specific ban; physicians there are governed by the same income thresholds and reasonableness analysis as everyone else.

Lawyers are a category apart. Rule of Professional Conduct 5.6, adopted in all four states, prohibits agreements restricting a lawyer’s right to practice after the relationship ends, outside of retirement benefits and certain sale-of-practice arrangements. A non-compete against a departing attorney is generally unenforceable as a matter of professional responsibility, not merely contract law. The rule reaches indirect restraints too: in Cohen v. Lord, Day & Lord, 75 N.Y.2d 95 (1989), New York’s Court of Appeals struck down a partnership provision forfeiting a departing partner’s earned compensation if he continued to practice in competition, treating the financial penalty as an impermissible restriction.

Where the Leverage Usually Is

Most of these disputes resolve without litigation, and the leverage points repeat. Was there adequate consideration? Is the geographic and temporal scope tied to anything real? Are you actually competing, or working in an adjacent role your covenant does not reach? Were you terminated without cause, which weakens the equities and, in Pennsylvania healthcare, is dispositive? Does the choice-of-law clause point to a state whose law your home state would refuse to apply? A prompt, well-supported response from counsel proposing a narrowed scope often ends the matter, because your former employer must weigh the cost of a preliminary injunction motion it may lose.

The Bottom Line

Do not resign your new job because a letter told you to, and do not ignore the letter because the internet told you non-competes are unenforceable. They are enforceable in all four of these states, within limits that vary enormously. Get the agreement in front of a lawyer where you work, move quickly, and preserve everything.

Legal note: This article provides general information and is not legal advice.