Originally he brought this up and I was thinking like 10 to 20%. He then said something to the degree of a half percent per year.
I unfortunately did sign a non-compete. The founder has pretty tight connections within this industry. It would be hard to steal clients to begin with -- I make sure all of the work is perfect and the clients are happy. I also would feel unethical doing so.
datawalke can go nuclear and threaten to drop a dime on the IRS (and the state come to think of it). The boss may think he's being smart by using Simon Legree as his role model but it's set him up for some really severe real world retribution, very possibly including personal bankruptcy (see my earliest reply in this topic for details: http://news.ycombinator.com/item?id=1446428).
Whether to do so may be a personal choice. But if you do, get out first; don't do it while you are dependent on the place. Based on your description, finding other work that pays at least as well should not be terribly difficult even in this market (the one caveat being to explain why your pay was so low; there was a recent HN conversation on whether to provide previous pay data and how to appropriately decline to do so, that may be useful). And you don't want to be job hunting while embroiled in such a scenario.
Based on your description, I would expect NOTHING from your current employer. Actions speak louder than words, and this guy's actions have "asshole" written all over them.
He could also heavy his boss into releasing him from the non-compete. A lawyer would be necessary here, as you don't want to cross the line into blackmail ...
Originally he brought this up and I was thinking like 10 to 20%. He then said something to the degree of a half percent per year.
I unfortunately did sign a non-compete. The founder has pretty tight connections within this industry. It would be hard to steal clients to begin with -- I make sure all of the work is perfect and the clients are happy. I also would feel unethical doing so.