Your employer shouldn't own what you do in your off-time. Learn more about unenforceable legalese in this blog post by Joel Spolsky.
I noticed this github discussion via Hacker News, and in the comments there’s a link to a blog post by Joel Spolsky, who gives a bird’s eye view of the whole prior invention / noncompete clauses that tend to appear in the employee contracts of developers, from both the perspective of the employer and the employee. He also sheds some light on how things got this way.
I am, of course, 100% opposed to both types of clauses, but it’s worth researching how your state treats the notorious non-compete clause, since it varies across the country.