Or, doing things "on your own time".
First let me make it clear "I AM NOT A LAWYER". But...my understanding of the law in California is that if you create something related to the business of the company you work for, EVEN ON YOUR OWN TIME, it belongs to the company, not you. That may sound shocking to you. Let me try to explain why it's probably got to be that way.
First off let me also point out that only a few states are this much in favor of the individual employee. Most states, even if what you create is not related to your company's business they may own it.
Why is the this the law? Well, let's try the opposite idea and see where it takes us. Let's assume the law was "Anything you do on your own time belongs to you." Hey, it's your own time, why should it belong to the company you work for? Okay, so in a world where that's the law, you're at work, you work for an automobile manufacture, you are in a meeting and the boss says "We've got this problem, our new engine is only getting 20 mpg, we need to figure out how to get it to 30 mpg, anyone have any good ideas please present them." Nothing occurs to you at work. You drive home, have dinner, and while taking a shower you think "Ah ha! I've got an idea that will solve the fuel efficiency problem." Do you go to work and tell your boss? According to this hypothetical law, you came up with the idea "on your own time" so the idea belongs to you. There's no reason to give it to your boss. Maybe you should call up some other car company and try to start a bidding war for the idea. That would be really slimy given the company you work for is paying you $120k a year for your ideas and solutions but hey, that's their problem. It was *your own time*.
Or, let's say you're at work and you're in a meeting and you're told "Hey, there's a huge opportunity here. I'm a personal friend of the CEO of a Fortune 500 firm and he says they are in the market for a product like ours. You guys go pitch our product to them." and so knowing the law of "on your own time" you decide to wait until after work or you take a day off and go pitch that CEO your own product, not the product of the company you work for. Yes, it's slimy but hey, it was "on your own time".
I hope you can see how obvious it is that the idea that something you do or create "on your own time" should not just automatically belong to you. Your company gives you info you can only get through them and they pay you for your ideas. For most people in this type of position, they are salaried employees so there is no set 8 hours a day. You're working whenever you do anything related to the company.
At least in California the issue is restricted to business and ideas related to your company's business. I don't know what the court's interpretation of that is but I suspect it means if you work for an automobile company than pretty much anything you do related to cars belongs to your company. If you work for a video game company, unless you get a contract saying otherwise, you can't make another video game "on your own time". Without a contract stating otherwise the law would say that game belongs to your company. If you worked at Intuit you couldn't make financial or tax software.
Where does the law draw the line? I have no idea. There's clearly some kind of sliding scale. If work for Nintendo can I make a WiiWare game "on my own time"? Arguably not. Can I make an iPhone game? Nintendo doesn't make iPhone games so it's not their business right? Well, of course the court would decide that. I suspect they would side with Nintendo because Nintendo could show that iPhone is a direct competitor to their business. There's certainly lots of press to back them up. Could you make an ad supported Flash game? I doubt that as well. Could you make image editing software? Now it starts to get grayer. Nintendo ships image editing software for both DS and Wii. How about blogging software? Well, if it was up to me I'd say that would be okay. I don't know what a judge would say. Could you write a book? Seems pretty far from Nintendo's business. Except of course Nintendo published books on games so you might need to stay away from books about games unless you can get Nintendo to sign something says they don't own it.
For companies like Intuit and Nintendo this is pretty easy. For companies that are into more things it gets much harder. If you work in Sony's Battery division could you make an iPhone game? Well, that would be competing with Sony's PSP, PS3 and Sony Ericcson's phones so that certainly seems to me like it would require a contract. Could you make a social networking website? Again it's hard to say. Sony has all kinds of things that could be considered as in the same business as social networks. They have the Playstation Network. They have Everquest. They have several online communities in Japan they may be considering bringing to other place. If you're itching to moonlight then working for a company that has there fingers in a ton of different things could be a problem.
Here's the funny thing. If you are an independent contractor much of this changes. When you're an independent contractor, for the most part you can do whatever you want on your own time and it belongs to you. Of course generally the details of the contracts you sign will make it clear that you can't use any tech or ideas that come up in the course of the work you do for the company but outside of that you're free to make things even in the same field as the companies you are contracted with. For example you could be contracting with Microsoft and also making a Sony game. In my last game job I was an independent contractor. I choose that specifically so I'd have this freedom to do other projects. Of course I gave up much of the security or perceived security of a normal employee. Employees got medical and other benefits, I didn't. Employees got paid vacations where as as an independent contractor, taking a vacation meant a big pay cut that month. When the project is over an employee generally keeps working where as a contractor is instantly out of a job.
The overall point of this post is, just because it's "own your own time" doesn't mean it belongs to you. If you're an employee and you plan to create or do something "on your own time" that is remotely related to what your company does you'd better get a contract from them that says they will not claim ownership. Otherwise you're just asking to have all your hard work taken away from you.