[steffan]

Facebook and Google, among others, have offices outside of CA. Employees of those offices do not pay CA income tax. (They do however, for their respective states)

[vitus]

To expand on this:

Several of my coworkers who moved from the Bay Area still pay CA taxes for stocks that were granted before they moved, which means potentially 4 years of paying taxes for two separate states.

On the plus side, their CA tax bracket is much lower, since they don't have salary / bonus / new stock grants.

[jstepka]

Companies setup subsidiary corporations in states employees are in if the tax situation makes sense.

This is especially true if you use an outsourced HR company like TriNet for payroll, which many startups do.