I think the OP's point is not that startups need this, but that people working 9-5 in a cubical farm in CA have a chance at starting a side business and eventually growing it into a startup, whereas in NY they have less protection for that sort of work.
No one is going to ask, before the first day on the job, for that kind of alteration to the standard employment contract. They're very likely to lose the offer. Talking about side projects before the first week of work is not a good career move, especially if you're young (22-24) and have no leverage at all.
Add to this that the side project problem isn't relevant for many people, and people can't predict 5-10 years out whether it will be relevant to them. How many 22-year-olds expect to write a $20,000/month iPhone app, some time in the future, and aren't already trying to do it? Also, if you do a side project on your own equipment and time, most of the time you can hide the fact that much of the work occurred while under a surrender-all; if nothing else, just rewrite the code outright after you leave, since the code will be better and take much less time to write on a second write. This means, from a practical standpoint, that most people don't worry about this situation until/unless they end up in the 0.1% it actually affects and it's too late. This law is only relevant to extreme edge cases; for the rest, it merely makes a statement about the meaning of employment, and in the New York case, it makes a disgusting one.
You can definitely get away with this if you steadfastedly request a change to the contract that says that work done outside of the office is your own. There's a war for talent going on... developers have plenty of leverage.
You do have to push hard though, its extra legal work for them and so they'll deter you mainly for that reason.
This presumes you're desperate for work, those that get stuff done have no problem, they approach the business forthrightly and tell them this is what I'm working on, and I want it to be mine. If a business has an objection to a person owning the rights to their work, then you can tell your signing up for indentured servitude rather than employment. It's not a place you want to work for anyway.
I used to have this attitude as well that I couldn't ask for stuff and no one would agree, I gave it up, started approaching things earnestly and honestly and it's amazing the things people will do if you ask them in a respectful and polite manner.
It depends who you are. If you're an established software engineer with a name, sure. If you're a 22-year-old out of college, no chance. Most of us are between those extremes, of course, and generally realize at some point that we've moved into the with-leverage crowd. But nobody starts there.
I actually think it's best, as a general principle, not to work on side projects while employed. If the side project really is a side project (i.e. it's unrelated to your work and therefore something you justly own) you'll do a much better job of it if you work on it full-time. The side project and the day job usually both suffer if you try to serve two masters. But there are cases to which this principle doesn't apply (i.e. an iPhone app that doesn't take much time to build but becomes very popular) and it's for those that we need (in NY) better laws.
I find it hard to believe that it would be an unreasonable request that any work you do outside of the office, on a personal machine, and not utilizing any company IP be under your ownership. If such an issue does turn into a sticking point during negotiations, you should strongly consider that a red flag.
I'd really like a list of these companies with HR departments that are going to allow an exception to the standard contract because we just really need this guy.
You're absolutely right that companies would be better off in attracting talent by revising portions of their contract. You're absolutely wrong to suppose that they're necessarily going to do that.
Every one of them, in my experience. I think I've waived that particular clause (or refused to sign the agreement) five times now for five different employers.
You just need to mention it when they give you the agreement to sign. By the time there's a piece of paper printed out with your name on it, they're committed. And on the other side of the table from that piece of paper is the guy who hired you. A reasonable person that can recognize a silly clause when you point it out.
Just cross out the paragraph, initial next to it, then sign and hand it back. If they want to make a big deal about it, it's them making the big deal, not you.
For a lot of work it's standard practice to pay minimum wage and that's what most employers of such workers do. They don't make exceptions for a particular worker even if he has demonstrated surprising aptitude for, say, bagging groceries. Likewise, invention clauses like this are quite common, even the norm in some areas, and no company is going to make an exception for a particular worker no matter how valuable he might be.
Libertarian arguments like this which stress contracts often seem to fall flat by the following reasoning:
1 We seem to agree on what the desired outcome is.
2 If contract theory fails here, the outcome is undesirable.
3 If contract theory succeeds, the outcome is identical to what we would have achieved with legislation.
4 A legislative solution doesn't carry with it the uncertainly that a contractual solution would.
∴ Legislation seems preferable.
You have to know what outcome you want to effect of course, and be reasonably sure your legislation will achieve that. In this case we see (or at least strongly suspect) that when companies are not allowed to own IP produced by their employees independent of company resources and unrelated to their business, the financial benefit to the employee and the benefit to society in economic growth far exceed the benefit to the company (in most cases this benefit is zero). If there were a wider range of solutions I would not support legislation (or possibly I would support narrower legislation), but that doesn't seem to be the case. So I support legislation.
Many employers operating outside of California have a policy very similar to the California law. There are some companies with even more generous policies, though I'm not familiar with any major tech companies with a more generous policy.
