To preface, I'm running Red Hat Enterprise Linux and assume you have nano installed. If not vi will work just fine.

Also using PuTTY to access my Linux server from a Windows host.

So, to jail folks up we've taken this approach which I think is pretty straight forward and easy.

1. Open a terminal and type:

nano /etc/passwd

2. Make two changes:

Set the user's home directory to whatever the home directory is for the website they work on:
/var/www/html/website_name
Set their login shell to /sbin/nologin

Save it with a Ctrl+x, hit the "y" key, then Enter to confirm.

To finish up, you must add their login name to the /etc/vsftpd/chroot_list.

After that, again, save the file using the instructions above.

That'll keep them to their own and restrict access to other levels of the server.

Done.

Got a better way to do it? Let me know!