Is it legal for an employer to pay their children a full-time salary even if the children do not work for the company?

When you say children, do you mean minors or adult children?

And how do you know what they may or may not be doing to benefit the company by working from home or at other locations?

The children are in their 20's and are full-time students. There is absolutely nothing they could be doing away from the office. They go to college full time and get paid a full-time salary from the company (which is family owned).

There is no law that prohibits this. And frankly, it's none of your business.

I still say you have no way of knowing that they are not doing anything for the company. I worked for a family owned business where the owner's wife was paid a full time salary and I had plenty of people griping to me that she didn't do anything; she never came into the office, etc. etc. What they didn't know was that she was managing most of the accounting function from home as well as doing multiple projects at the upper management level. So don't be too certain there is "nothing they can possibly be doing". For all you know, they could be doing something as part of a college credit.

Agree with cbg. Keep your nose clean and stay out of it.