The employment contracts will include clauses to that effect. All the company has to do is wait till you do something that appears successful and then jump in. When I worked in the UK all employment contracts I was given also prohibited any work elsewhere without company permission - eg you couldn't also work part time at a local supermarket. That is something I have never seen in California employment contracts.
An example of California law working is that the founders of Hotmail were working for other companies when they wondered why you couldn't access email in a browser. eBay was a similar hobby project.