[rprasad]

Different circumstances, but still illegal in California because it restricts the freedom of employment of Meebo's employees.

No-poaching clauses are illegal in California, but poaching clauses can contain "referral fees" under which the poaching company must pay the original employer a substantial amount of money (usually, a year's salary of the employee poached) if they hire one of its employees during or within a year after the end of the contract period.