"California law voids any provision, contract term or purported "agreement" that prevents them from working for a
competitor or to work for him or herself. In other words,
restrictions on an employee's right to work for a competitor
or to operate a competing business are illegal and cannot be
enforced"
Well, in this case, Mr. Horowitz worked for Yahoo, in what was clearly a California job. The California laws would most certainly prevail.
If you work for Microsoft, in Washington, then there's likely to be a tight non-compete clause. Washington courts are very permissive toward employers regarding non-compete provisions. I can't speak to the specifics, although there was a high-profile case a year ago involving a Microsoft executive who was sued and ultimately was prohibited from working for Google.
Finally, many companies don't enforce non-compete agreements strictly unless you do something wrong, i.e. stealing information from your employer to help someone else directly compete against them.
The case you're talking about, I think, was that of Kai-Fu Lee, who actually was allowed to work at Google, but wasn't allowed to work in the areas he worked in at Microsoft for a year. Instead, he did general recruiting.
Ah, good point. But in that case, Microsoft still put their foot down, and it was decided in a Washington state court.
(I just did some research about this a few weeks ago. Had Google filed a case first, asking for a declaratory judgment, they likely could have gotten it handled in California courts, and the decision would have gone the other way. Seems like a rather screwy system...)
Source: http://www.employlaw.com/noncompete.htm