Question:

I am a salesperson for an auto dealership that provides an employee discount. My manager is strongly encouraging me to buy a car from the dealership. I’ve been saving to buy a new vehicle for a long time, but the car I want is from a different manufacturer. I worry about whether my employer would fire me for not buying from the dealership. Would buying a vehicle from someone other than my employer risk my job? May an employer make its employees shop at certain places?

Answer:

California Labor Code section 450 prohibits an employer from compelling or coercing an employee or applicant to purchase goods or services from his or her employer or any other person. Because the law prohibits employers from compelling employees to patronize their businesses, you should be free to buy the vehicle of your choice.

An example of a Labor Code Section 450 issue arose when Abercrombie & Fitch offered a clothing discount to employees and required them to “stay current with the season.” A class action was filed on behalf of employees who alleged they were required to purchase and wear clothing from Abercrombie & Fitch to meet the dress requirements of the job. That case settled for $2.2 million. In another class action, Polo Ralph Lauren was sued because it required all retail sales associates to purchase Polo Ralph Lauren clothing and accessories as a condition of their employment. This requirement was stated in the Polo Ralph Lauren Employee Handbook and was enforced by inspection of workers’ clothing. The Polo Ralph Lauren case ultimately settled for $ 1 million in cash and $ 500,000 in gift cards for Polo merchandise.

Although California law permits employers to require employees to wear a particular style of clothing, normally the employer must provide the clothing or reimburse workers for its purchase if the clothing is of “distinctive design or color.” However, an employer is not required to pay for uniforms “generally usable in the employee’s occupation” such as black and white uniforms of unspecified design worn by food servers.

Labor Code Section 450 also applies to services. For example, if an employee works for a gaming establishment but prefers to go elsewhere to play games when off duty, the employee cannot be fired or disciplined for not patronizing the card room of his or her employer. This law also prohibits an employer from requiring an applicant to pay a fee to apply for a job, to obtain an application, or to process an application. In one case, actors were required to pay a fee for a workshop that offered little instruction and instead was meant to be a forum for auditioning. The court held that the workshop fee violated Labor Code Section 450.

In addition to the above, federal law provides that employees also cannot be required to endorse or provide testimonials for the employer’s goods and services. Under Federal Trade Commission guidelines, employees who endorse their employer’s products or services have a duty to disclose to their audience their relationship to an employer at the time they give the endorsement or testimonial.
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