That is completely within the employee's rights. Unless it's covered by a trade secret, patent or copyright, what you know (even if you learned it on the job) is yours to use.
How would the employee know what is a trade secret though? When something is first discovered it is not known yet that the employer would want it kept secret until someone in a position to make that decision does so.
Are their laws around this? Or is it set mostly through case law? Anyone have additional information?
IANAL, but the important pieces (in most states) come from the Uniform Trade Secrets Act[0], which defines a Trade Secret. I'm pretty sure that most software ideas developed at software companies can be considered trade secrets, unless they're commonly known, but once again IANAL and don't have a solid handle on that.
