Presumably she wouldn't be allowed to /start/ a company, either.
No, she couldn't start a competing company.
I signed a noncompete, and am now starting a company. The only thing the noncompete prevents me from doing is a certain kind of high frequency trading.
Outside CA, large tech companies tend to interpret a "competing company" to mean "another tech company", or at least they try to advance that interpretation (courts don't always accept it). For example, IBM's position is that a non-compete prohibits you from working in any field of endeavor that IBM works in, not only the specific one you previously worked in at IBM--- and IBM works in quite a lot of technology areas.
Related: A decade or so ago, I worked for a small company that was acquired by Lucent, and part of their legal paperwork involved assigning any IP we created that was relevant to Lucent’s current or future businesses. A co-worker of mine observed that according to this document, if Lucent got into the Web content business, it would own his personal Web site.
Hmm, that's an obvious-in-retrospect approach I hadn't thought of. Just try to submit an addendum that defines the relevant field as something that isn't absurd-sounding, but is quite specific to what you're being hired for, and therefore clearly excludes wide swathes of things that aren't that.
No, she couldn't start a competing company.
I signed a noncompete, and am now starting a company. The only thing the noncompete prevents me from doing is a certain kind of high frequency trading.