nothing is stopping these guys from coding something up after work/on the weekend. Sure it'll take twice as long to release a project, but it's a small price to keep getting $20K a month salary
Quite the contrary, you don't know Google's non-compete work-contract provisions and, if any, how would they held up in court, so your statement is quite speculative.
Besides, the last thing you'd want to do is to work after-hours and find out your employer is owning the IP of your project (that's besides pager-duty and other after-hour things your employer might make mandatory anyway).
Regarding taking twice as long, just imagine projects like Dropbox or Twitter taking twice as long to get to the market - I doubt they would be competitive in the same manner.
I will preface this by saying I have never worked at google and have not seen their employment contract so perhaps they've found a way around it but from what I understand, California has well established laws in place protecting moonlighting. As long as you aren't coding up a search engine or something that directly competes with the company, you should be ok.
a search engine or something that directly competes with the company
That's a lot of things for Google these days, though. Not just search engines, but also: local search, video streaming, webmail, contextual advertising, maps, route planning, social networking, flight search, RSS aggregation, collaborative document editing, machine translation, VOIP, web browsers, mobile operating systems, app stores, programming languages/compilers/VMs, web frameworks, cloud-computing services, etc., etc.
Newspapers did a lot of things too. But it was Classified Ads that let them do it.
Once they lost that revenue stream -- every other part of the business suffers.
See the comment below, it's not "directly", it's "demonstrably anticipated research or development", which in the case of Google means anything (even games, thanks to Google+).
Also think for a minute about what "you should be ok" means in this context. Sure, if you are developing something in your spare time that kinda-mostly-doesn't-compete with what your employer is doing, and they find out, maybe they can't legally go after you.
But that doesn't mean that they're obligated to keep sending you a paycheck, either. California is an at-will employment state, and violating your employment contract tends to remove the "will" to employ you.
You are right on the money. Starting a startup while working for Google would be an absolute non-starter. Any code you write, they own (within certain restrictions that end up being so broad as not to matter.) And moonlighting in a business that competes with Google would be grounds for termination.
>the last thing you'd want to do is to work after-hours and find out your employer is owning the IP of your project
Has this ever happened? I would imagine that if some guy got his FU money taken away and given to some big company where it would be too small to even register on the income statements that said person wouldn't just lay there and take it.
After all, what you're describing is literally slavery (i.e. anything the slave makes belongs to his/her owner).
California's laws state that IP can only be contractually assigned to the employer if it is "related to the employer's business or [to the employer's] actual or demonstrably anticipated research or development." Google's position, when I was there, appeared to be that 1) any web app and 2) any app for any phone or tablet, was "related to ... actual or demonstrably anticipated R&D."
There's a lot Google could claim under California law, but that's almost certainly too broad an interpretation to make it through court unmodified.
Ignoring the PR problem, if they sued one of their engineers over, say, an iPhone racing game, a sane judge is going to make them work pretty damn hard to demonstrate that it has any relation to their business.
