We have a 10 year old Employee Manual that states you must report to the owners (under 50 employee company) if you have another job or if you are about to have another job.
Reason is that they want to gauge your tiredness if your 2nd job effects your "real" job negatively. Also, I suspect, to watch for using company time to fulfill other job functions.
Is it legal? If someone picks up a part-time, seasonal only job to cover Christmas gifts or summer vacation money or to get out from under bills, is it legal that they fess up to this extra work. Moonlighting - it may be embarrassing to confess this....:confused:

There is nothing illegal about such a policy. Nor is it particularly uncommon in some industries.

I would not feel embarrased either, at christmas time, I should take on two extra jobs tee hee! My guess would be that they would not care about a seasonal job, for christmas reasons, as apposed to a year round second job. My past jobs, have told me, in no uncertain terms, that they want the best of me, and I could have a second job, but they would ask me to quit if it ever interfered with my current job duties. I even had to quit a second job, because my first job would scheduale me for the times I was to work my second job. They can do this, as cbg mentioned, it is very normal. Good luck!

There are good reasons to be concerned about "moonlighting."

Max worked for me putting in 35 hours a week and worked another job somewhere around 40 hours a week. His other job limited when he could work for me, but as long as he worked his regular schedule and was not absent, I didn't care. Max has worked for me for four years and I long ago stopped being concerned about burnout. When he left the other job and was looking for a new one, a prospective employer called me. They, too, were concerned about the number of hours he would be working between the two companies. After talking to me, they hired him. That was two years ago and they made him a manager two months ago (he gave up a day with me as a result, but I am fine with that).

Hal also had another job while working for me. Hal called in twice in a month that he HAD to work extra shifts at the other job and would not be able to work the ones I scheduled him to work. He did not get a third chance to make us second fiddle.