the only thing I can think of is that maybe you need to add this to your has_many line:
has_many :employees, :class_name => “User”, :foreign_key => “company_id”
that or add the foreign_key to the User class. When I write my apps, just to be sure the reference is correct, i add the foreign key to both of the models if I’m not using the default foreign key scheme. I figure it doesn’t hurt. Otherwise just try it in each one individually and see which one works.