Are demand letters effective to force a settlement with your previous employer?

The typical demand letter essentially threatens litigation in the event that a satisfactory settlement is not reached.

The effectiveness of this approach depends primarily on the strength of the employee's potential legal claims. If the claims are weak or mere puffery, then the employer most likely will reject the demand letter with a sternly written letter of its own. Furthermore, if the claims are weak or mere puffery, then sending a demand letter is likely to destroy whatever goodwill may have existed with the employer, making it even less likely that some kind of settlement will be reached. Demand letters are inherently adversarial, which may not be the right approach for a particular situation.

Each case needs to be evaluated carefully: What are the facts? What are the potential legal claims? How strong are the claims? How much are they "worth"? Very importantly, what does the client prefer - a modest but quick settlement or a lengthy lawsuit that could result in a larger recovery or none at all? Litigation can be very burdensome in terms of time, money, and mental energy, and almost always is uncertain in terms of likelihood of success and how much money might be won. 

Remember that all legal claims are subject to statutes of limitations, meaning you must take legal action within a certain period of time or you lose the claim forever. Each claim has a different statute of limitations. Some are shorter and some are longer. You should consult with a qualified employment lawyer as soon as possible. Very vest wishes.