This is common in almost every mid to large size corporation in the US with a legal department. If you're working on a side project, it might be best to clear it up with your employer and make sure it's not a conflict of interest.

It's mainly an issue of copyright. The company wants to make sure it owns the IP to every line of code you write. For example, if you do some work on the weekend they want to make sure they own the copyright to that.

Every company I've worked for had a clause in my hiring contracts. Some will enforce it more than others.

Here's some in depth discussion: http://answers.onstartups.com/questions/19422/if-im-working-...