Clauses like that aren’t allowed in California. California law says that anything I do in my own time, on my own equipment, and not related to my company’s product is something my employer is not allowed to own.
I make this crystal clear whenever signing an “inventions” clause, and I avoid companies which make, say, DNS servers, for exactly that reason.
The sentence in question is misinterpreted. I read it like this: our contract applies all the time, not only when you're directly working for the company. We don't know what the contract exactly says. Likely there's an agreement not to work on IBM-related products in spare time.
Why only CA? Shouldn't it be that "the law" overrides illegal contracts - basically a tautology? Otherwise, what's stopping anyone from writing illegal contracts and forcing the other party to abide by them?
That would instantly make me start to execute on becoming an IBM employee 0% of my time.