Costs Make Employers See Smokers as a Drag
By Daniel Costello
Times Staff Writer
January 28, 2005
Employers have recently tried every carrot they can think of — including cash incentives and iPods — to persuade employees to quit smoking. Now some are trying the stick.
Pointing to rising health costs and the oversized proportion of insurance claims attributed to smokers, some employers in California and around the country are refusing to hire applicants who smoke and, sometimes, firing employees who refuse to quit.
"Employers are realizing the majority of health costs are spent on a small minority of workers," says Bill Whitmer, chief executive of the Health Enhancement Research Organization, an employer and healthcare coalition in Birmingham, Ala.
Federal and state laws bar employers from turning down applicants or firing workers based on race, religion or gender. Some states have enacted laws offering similar protections for smokers. But experts say workers in nearly half the states, including California, have few legal options if employers decide to prohibit them from smoking outside the workplace.
Employees in many states "work at the discretion of their employers and can be terminated for almost any reason as long as it's not illegal," says Stephen Sugarman, a law professor at UC Berkeley.
Last fall, Union Pacific Corp., an Omaha-based transportation company, stopped hiring smokers in seven states. Company executives said the move was made to help quell employee health costs, which have jumped more than 10% each of the last three years. Weyco Inc., an employee benefits firm with 200 employees in Okemos, Mich., began random drug tests for nicotine on Jan. 1, saying it would fire workers who failed the test or refused to quit smoking. (Four Weyco employees resigned rather than take the test, says the company's president, Howard Weyers.) The Riverside County Sheriff's Department plans soon to require applicants for deputy sheriff positions to sign a no-smoking agreement.
In most cases, employers are asking workers to report their smoking habits voluntarily or adding disclaimers such as "nonsmokers only" to job postings. Others are requiring workers to take breathalyzer tests that can catch traces of carbon monoxide in their lungs or submit to urine tests to detect nicotine.
A sheriff's office in Florida is asking job applicants who have a recent history of smoking to pass a polygraph test proving they no longer smoke outside of work.
Employees, workers' rights groups and some unions are decrying the smoking bans as an invasion of individual rights. "What you do in your own home after work or on the weekend is none of your bosses' business," says Lewis Maltby, president of the National Workrights Institute in Princeton, N.J., a spinoff of the American Civil Liberties Union. "The last time I checked, tobacco is a legal product."
Maltby says his organization is trying to persuade some states to pass broader worker-protection laws.
Critics of the smoking bans say it's not clear that smokers are more costly than other workers, such as people who are obese. Though some studies have shown that smokers have higher absentee and lower productivity rates than nonsmokers, economists say the research is limited. It's possible, they say, that smokers don't dramatically increase health costs with chronic and expensive conditions like emphysema, heart disease and cancer until they're much older, when they may be employed elsewhere or retired.
"It sounds right for employers to say, 'If we get rid of them, we'll save money.' But no one has the concrete data to prove that right now," says Tom Morrison, senior vice president of Segal Co., an employee benefits consulting firm in New York.
Although smoking rates continue to fall across the country — an estimated 23% of adults smoke today, down from 37% in 1970 — employers say they need to find new ways to rein in health costs. According to the Kaiser Family Foundation, a health policy group based in Menlo Park, Calif., health insurance premiums rose 11.2% last year, the fourth consecutive year of double-digit growth.
Some companies have begun charging smokers higher health insurance premiums and forcing others into employee wellness programs filled with smoking-cessation plans. Last month, Alabama announced plans to raise insurance rates on public employees throughout the state who smoke, and it is considering doing the same with obese workers. And, of course, many employers have banned smoking within the workplace for years.
In December, a national study by the Society for Human Resource Management found that nearly a third of U.S. employers polled had smoking-cessation programs; 5% prefer not to hire smokers and 1% refuse to hire smokers.
Weyers, of Weyco, says he instituted his new employee smoking policy after realizing that "if I don't do something to change employees' demand for healthcare, I'll never do anything about costs." Weyers estimates he now spends $750,000 a year on employee health premiums, and he worries he can't absorb many more cost increases. The company self-funds its insurance plan so any reduction in health costs would bring immediate savings.
Weyers says that though some employees complained about the smoking ban — and several left — most employees have slowly come to accept the new policy. The company estimates that about 10% of its workforce smoked and calculates that 28 employees and their spouses have quit since the new initiative was announced a year ago.
Critics are concerned that if more companies follow suit, it will lead to other employer intrusions on workers' lives. What is to stop companies from telling workers they can't ride motorcycles? Or eat junk food?
Legal protections of off-work activities vary considerably around the country, with the general rule giving employers the right to fire an employee for nearly any reason. Employees in Colorado are protected in most legal behaviors outside of work, whereas those in New York are protected when engaging in specific activities like recreation, politics and consumption of legal products. California has less protection around workers' off-the-job behavior, although they can participate in political organizations. California prohibits random employee drug testing other than for job applicants and workers in high-risk occupations such as trucking or medicine.
Maltby, of the Workrights Institute, says employees are facing a variety of challenges to their freedoms outside of work. A worker in Texas was fired in 2003 for having an affair off the job. This fall, a woman in Alabama lost her job for refusing to remove a John Kerry bumper sticker from her car. (She was later hired by the Kerry campaign.)
Sugarman, of the University of California, says big employers may shy away from "paternalistic behavior," such as banning smoking outside of work, because it could make it more difficult to recruit and retain workers. Union Pacific says it will allow some exceptions to its policy. The company will hire a smoker if it cannot find another suitable applicant, a company spokeswoman says.
Michael Halpern, a physician and health researcher at Washington, D.C.-based consulting firm Exponent Inc., has studied smoking-related costs for employers. His research suggests that smokers may have higher rates of absenteeism because they are more likely to suffer from upper respiratory infections and other illnesses. Also, smokers may be more likely to have less healthful lifestyles, such as poor diets and infrequent physical activity. Still, he recommends employers stick with positive incentives to entice smokers to quit.
"My feeling is that the data is just too limited to support" drastic moves such as firing, he says.