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A Job or a Cigarette? As health insurance costs continue to climb, companies are urging employees to curb unhealthy behavior like smoking–and sometimes refusing to hire smokers at all. Will Big Mac lovers be next?

February 24th, 2005 No comments

Newsweek
Jennifer Barrett Ozols

Weyco may be one of the only large companies in the country that can boast not only a smoke-free workplace, but a smoke-free workforce. Achieving that status, however, didn’t come without a lot of effort–and controversy.

Howard Weyers, the founder and CEO of the Michigan-based health-benefits-management company, attracted a lot of media attention–and the ire of workers’ advocates–when he let go four employees recently after they refused to stop smoking. Civil-rights activists accused the company of discrimination, arguing that Weyers was punishing workers for engaging in a legal activity on their own time.

Weyers claimed that he gave his employees plenty of notice and opportunities and incentives to quit. “I gave them a little over 15 months to decide which is most important: my job or tobacco?” says Weyers. That’s a question that more Americans may be asking themselves these days. Most companies already ban tobacco use in the workplace and more than a half dozen states and hundreds of cities have enacted laws to the same effect. Now, citing rising health-insurance costs and concerns about employees’ well-being, a growing number of companies are refusing to hire people who smoke, even if they do so on their own time and nowhere near their jobs. An estimated 6,000 employers no longer hire smokers, according to the National Workrights Institute, an affiliate of the American Civil Liberties Union.

From a sheriff’s department in San Mateo County, Calif., to an Ace Hardware store in St. Petersburg, Fla., to a community college in Kalamazoo, Mich., employers in several industries and states are telling smokers they need not apply. Even large corporations like Union Pacific have tightened restrictions. Last fall, the railroad company announced a no-smoking policy anywhere on its properties, including rail yards and train stations. In eight states where there are no statutes forbidding it, job applicants who indicate they are smokers are automatically rejected, says Union Pacific spokesman John Bromley. “The thinking was, you have to go to so much effort to help people stop smoking and to deal with the extra health costs that smokers have that it made more sense to just not hire smokers in the first place,” says Bromley.

Weyers stopped hiring smokers at Weyco in early 2003 for the same reason, but there were still smokers on the payroll. So he paid for them to enroll in cessation programs and gave them a bonus once they’d kicked the habit. Then Weyers banned smoking on company property, so an employee had to punch out and actually walk off the property to light up. Finally, last year Weyco began monthly tobacco testing and charged a new $50-a-month fee to workers who tested positive or declined to be tested. The charge was intended in part to defray the costs of helping employees quit, but also to provide holdouts with another incentive to follow suit. Those who were identified as nonsmokers in the test were exempt from paying the fee. Smokers could waive the fee as well, if they agreed to enter a cessation program, which the company covered. Twenty of the 27 workers who tested positive for nicotine (out of about 200 total employees) ended up kicking the habit, says Weyers, along with at least three of their spouses. Another three smokers left the company for unrelated personal reasons. The four who remained at the end of the year were told that they would lose their jobs if they tested positive for nicotine in January. Rather than take the test, they left.

“We’re not trying to get rid of people,” says Weyers. “We’re just trying to get them healthier.” Of course, not everyone sees it that way. “If smoking can be used as a potential criterion for hiring or terminating employees, not only do you create a class of people no longer employable but, more importantly, you start down a very slippery slope,” says Jeremy Gruber, legal director of the National Workrights Institute. “There’s very little we do in our private lives that doesn’t affect our health or productivity. What’s next? Are employers going to start choosing what you eat off the job?” And the four former Weyco workers have since enlisted the help of state senator Virg Bernero, who has indicated he will introduce legislation to prevent employers from discriminating against people who smoke. At least 30 other states already have similar statutes in place that range from Arizona’s law, which forbids state agencies from discriminating against employees specifically on the basis of off-duty tobacco use, to North Dakota, where both private- and public-sector employers are banned from discriminating against workers on the basis of any lawful activity, including smoking, during nonworking hours. But there’s no question that companies are feeling the pinch from rising health-care expenses. According to a survey by the Kaiser Family Foundation and Health Research and Educational Trust, employer health-insurance premiums rose an average of more than 11 percent in 2004, the fourth consecutive year of double-digit growth. There were at least 5 million fewer jobs providing health insurance in 2004 than in 2001, according to the survey, in part because of soaring costs. Premiums for employer-sponsored health insurance have been rising at about five times the rate of inflation and workers’ earnings. In a poll conducted last fall by the Society for Human Resource Management (SHRM), more than 25 percent of the 375 companies surveyed said that increases in the costs of consumer services or products were somewhat (24 percent) or very (5 percent) likely in the next year to help cover the cost of employee health-care coverage. Twenty percent of those surveyed said it was somewhat likely–and 8 percent said it was very likely–that rising health-care costs would result in decreases in hiring of new staff. And many respondents said their company had made adjustments in copays, deductibles and the level of services offered through the health-insurance plan to offset rising costs.

Smoking is a common target of employer health programs. The Centers for Disease Control and Prevention has calculated the economic costs of smoking at $3,383 per smoker per year–$1,760 in lost productivity and $1,623 in excess medical expenditures. And cigarette smoking is the leading cause of preventable death in the United States. It’s blamed for a host of problems ranging from respiratory illnesses to cancer, coronary heart disease and even wrinkles. Each year, tobacco use accounts for approximately 417,000 premature deaths, including 50,000 among nonsmokers regularly exposed to second-hand smoke. Some employers, including Weyco, are also targeting another common cause of illness: obesity. In a study released this week, researchers at the University of Cincinnati in Ohio found that health-care expenditures related to excess weight totaled $56 billion in 2000. And a study last fall by researchers at Emory University attributed more than one quarter of the growth in health-care spending over the past 15 years to obesity.

That focus has led to some concerns that overweight workers could also find their jobs at risk. If there’s no state statute in place, says Kevin Zwetsch, a labor employment lawyer at Fowler White Boggs Banker in Florida, “There’s nothing unlawful about an employer saying if you want to work for me, you can’t eat Big Macs.”

Still, he doesn’t see that happening anytime soon. “There are immense cost pressures on employers with the way medical costs are rising so rapidly,” he says. “But there’s more of a direct link between cigarette smoking and health costs.” Instead, say employment experts, companies are taking a different approach to promoting healthy lifestyles. At Weyco, for example, there’s a wellness coordinator on staff who meets with employees individually, walking trails on the property and cash incentives for employees who meet weight-loss, fitness and other personalized health goals. “We want to be a model for our clients,” says Weyers.

Other companies are taking similar measures, from implementing wellness programs to offering discounts on gym memberships and low-fat food options in the company cafeteria. “You have a lot of employers who are really looking at what changes can be made in the workplace rather than in hiring practices,” says Jennifer Schramm, manager of the workplace trends and forecasting program at SHRM.

Some companies have redesigned their offices to encourage more exercise, setting elevators up to skip floors and installing stairs instead. Others offer on-site yoga and exercise classes or discounts at nearby gyms. And many have started offering low-carb and low-cal options in vending machines and cafeterias. Several companies that SHRM interviewed said they have programs in place to help employees with specific health issues like diabetes or asthma. “Employers are seeing they have to do some things to address the rising health costs,” says Schramm. “And many are now making the transition into offering preventive programs that really work.” Now that’s a solution that ought to please both employees and employers.

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