The clauses are often ignored by employees with side projects or startups because these clauses seldom cause any harm. But they seldom cause any harm because t

The clauses are often ignored by employees with side projects or startups because these clauses seldom cause any harm. But they seldom cause any harm because these side projects or startups seldom succeed. If your startup becomes the next Facebook, everyone will be after you. In short, by taking these clauses lightly, you are creating failure paths for yourself that begin from the initial light of success. You may not want to kill your big success even before it happens. If your goal is just to create a side income, you would most likely be fine simply because a lawsuit would cost more money than what it may recover, or you may just get some threats/scoldings. I have heard that if your side project or startup reaches something like $10 million in revenues, your big-company employer actually becomes liable to their shareholders to recover this money from you since it technically belongs to the shareholders. Some high-profile entrepreneurs have told me that you should not worry about lawsuits as they only come when you succeed and when you do, you have resources to take care of them. But I have also known specific cases of things doing down because of such issues (like the example from etsimm, who also responded to your comment). By the way, YCombinator submission form includes a question on such IP issues, though I may guess everyone just blindly picks "No issues" for it.