A lot of companies force you to sign an agreement that essentially hands over the rights to anything and everything you do while employed, even if you did it outside of work hours and on your own personal equipment. I'm not a lawyer so I don't know how enforceable this type of agreement is, but as far as I'm aware it has yet to be tested in court.

Your friends probably don't do games on the side because of such an agreement. I couldn't even imagine the issues that might arise from an employee working on mods for a competitor's game, especially since for some games modding isn't explicitly supported by the developer and modders are forced to break EULA's (by reverse engineering) in order to make the mods in the first place.