May Employer force an Employee to make Purchases

Yesterday, I have been approached by a long-time employee of the local manufacturing company in the Sacramento area. The employer had a side business (running poker gaming facility) which the employee also regularly attended. When the employee decided to play poker elsewhere, his employer terminated him, telling him that “they need a loyal employee who will not take his business elsewhere.”

This was a wrongful termination in violation of California Labor Code section 450, which states that employers are prohibited from forcing their employees to purchase the employer’s or anyone else’s products or services. Besides being grounds for civil damages, violation of section 450 is a misdemeanor under section 451 of the labor code.

In other words, the employer may not condition or encourage an employee to purchase anything from anyone with very few exceptions. If the employer requires an employee to wear a certain uniform at workplace, the employer must pay for the purchase of that uniform and for its upkeep.

Under Cal. Labor Code section 407, it is also unlawful to force an employee to invest in employer’s business or advertise for employer’s business as a condition for obtaining or maintaining employment. Violation of this section is also a misdemeanor under section 408.