Legal Question in Business Law in California

Not just on what you have said by itself. There is nothing illegal by itself about an employee setting up their own competing business. CONDUCTING a competing business while employed, especially if using the employer's resources (computers are an example) might be actionable. Taking and using trade secret information obtained while employed to then compete with the former employer is actionable. But just registering a corporation while employed, and then quitting or being fired and then getting the competing business underway, is perfectly legal.