I mean, is this really the case though? Any reasonable employer I know of would say, "Oh, well, that's unfortunate, but your business", and move on.
I think this repeated meme is just a good way to keep workers in their place.
She has a job in a different industry now and makes significantly less [like 50%]. She doesn't think she'll be able to retire before 70 because of it.
Admittedly, the industry was very small and incestuous and it isn't like Tech where labor holds alot of power at present.
I also have a family friend who is an idiot and did something similar for stupid reasons [it turns out he signed paperwork he thought he never had, didn't keep copies]. He ended up in a government job eventually but he spent a couple years on welfare because he didn't believe my parents when they told him no one would hire him.
It really has an impact, at least anecdotal. It is possible I'm unusual in having close relationships with 2 people who had this happen and its much rarer in the general population.
Was it a noncompete?
I've gotten that clause myself in an employee agreement. The company wanted me to sign and they said their lawyers "wouldn't let them" change it.
He should have tried [or not done what he did]. However, he made a mistake and paid for it.
However after the first job, nobody cares because you've proven yourself not to purposeful "trouble maker", and most likely makes the company look bad instead.
Markets are a fickle beast...