It's a very nasty situation. I had incurred what was significant expense for me at the time moving and my previous position had been filled. It was very early in my career, so getting a job would have taken longer than the meager savings I had time to accumulate by that time.
So I signed it. I consider having savings enough to be without work for a year, at minimum, over crap like this is a high priority for me. So also is not being at the arbitrary whims of the employer in a fairly one-sided power dynamic.
Iffy in your case, but it's not uncommon for companies to e.g. get new financing from not so clue-full investors who want to [ fill in the blank ] the employees.
Of course, if you sign it anyway under those conditions the mere threat of a lawsuit can prevent you from getting hired (keeping a low profile helps a lot there) or starting up a new business.
Or you could just move to California.
Sorry about the no cite on that, I think it was from a Time magazine article a few years ago.
Rather like slavery, come to think of it, the big issue of the status of a slave who escaped to a free state. Dred Scott is not considered to be one of the finer moments in US Supreme Court history.
Are you sure you're not remembering a case that falls under the exceptions to California law?
http://lawzilla.com/content/noncompete.shtml
"Who wins often depends upon a race to the courthouse. For multi-state employers it is often a rush to the courthouse to determine if a non-compete agreement is valid. The employer's strategy is to get an order outside of California in their favor. The employee or California prospective employer's strategy is to get an order within California in their favor. In the face of dueling, and opposing orders, the first to the courthouse may win because states often must give effect to orders from other courts."
The article I recall probably was about someone in california who was bound by a non-compete, but it wasn't the california courts that did it?
Anyway, my lack of expertise is really showing here, so I should probably stop. All I really wanted to say is yeah, I had that wrong.
An edit to the above: I tried negotiating in a respectful manner but didn't have much leverage after quitting my previous job and being told "What are you, a lawyer?"