[RiderOfGiraffes]

The question of what employers usually claim can be found recently on HN - you may find the discussions either here on on the linked articles interesting:

http://news.ycombinator.com/item?id=2208056

http://news.ycombinator.com/item?id=2209181

http://news.ycombinator.com/item?id=2209905

As to the question of what you "should" do, that's different, and up to you. What you "should" do is talk to your manager and say that you're not happy with outside work being verboten even when it doesn't prevent you from doing your "real job," and doesn't compete in the same space.

Make it clear that you understand their position, but try to get some acknowledgement of yours. You want to engage in these outside projects because you ened to keep your skills up-to-date and progressing. You don't want to be worried in case one of the side-projects takes off and makes money.

Start a dialog, and ask yourself how you feel about it.

[twinn]

Thanks so much for the advice! I was really hoping to find out how common this type of arrangement was and if people were comfortable working under it. The posts I've seen have mostly focused on the legal aspects of it.

[RiderOfGiraffes]

I've always believed that dialog is better than confrontation, and that reaching an agreement is better than fighting a corner. If you and your manager can agree common principles, then you should be able to get a decent working arrangement.

But you need to get the statement of principle in writing, so your manager can't get screwed by those above.

If you can't get that agreement even in principle, do you really want to be working there? Maybe you don't ahve a choice, maybe any job is better than no job, but if they don't trust you to do your work, and keep side-projects on the side, should you really trust them at all?

These are the questions I'd have.

Good luck. Maybe you could let us know how you get on. If you blog, write a post about it and point us to it.