If there’s one thing on which smokers and nonsmokers can agree, it’s that smoking is an expensive habit. While tobacco companies and trade groups challenge coupon and discount bans on cigarettes, employers have taken up a different fight against the rising costs of smoking. 
For several years, employers have begun offering smoking-cessation programs as part of company wellness efforts, and many companies have moved to create smoke-free work campuses. More recently, however, employers have taken a firmer “stick” approach—assessing health benefits surcharges for smokers and, in some cases, refusing to employ smokers at all.
Half of smoking costs attributed to lost productivity
In 2004, the Centers for Disease Control and Prevention (CDC) reported that cigarette smoking cost more than $193 billion annually. Unsurprisingly, half of those costs represented health care expenses related to smoking, and those costs have only increased in recent years. The other half of the costs measured—$97 billion—was attributed to lost productivity.
More recent studies back up the aging CDC data. A study completed last year by Ohio State University researchers found that businesses pay an average of $6,000 more per year per employee who smokes. More than half of those costs are attributed to lost productivity from smoke breaks alone, while other costs are attributed to absenteeism due to illness, lower productivity while on the job due to nicotine withdrawal, and, of course, additional health care costs.
Growing number choosing stick over carrot
In efforts to reduce employers’ share of those costs, many companies started offering smoking-cessation programs to help workers quit. But now some employers are simply kicking the habit cold turkey.
Healthcare organizations in particular, citing the desire to have their employees serve as role models to patients and clients while reducing exposure to secondand third-hand smoke, have started screening for nicotine before hire. Applicants who report tobacco use on a preliminary application may be told “thanks, but no thanks” and directed to reapply in 90 days—if they can answer that they’re now smoke-free. Upon a preliminary employment offer, potential hires undergo drug testing, which may include a screening for cotinine (a metabolite of nicotine) to detect use of any nicotine product within the prior week.
Currently, approximately four percent of companies that operate in states that don’t protect smokers from employment discrimination refuse employment to smokers. And the number is expected to rise another two percent this year.
Isn’t smoking legal off-duty conduct?
Tobacco use in any form isn’t a protected activity under federal law. That means that absent an intervening state or local law, you generally have broad freedom in banning smoking both in and out of the workplace. However, intervening state laws do exist. For example, South Carolina specifically prohibits mandatory nicotine or tobacco testing.
In addition, 29 states and the District of Columbia either specifically prohibit employers from refusing to hire or firing an employee for off-duty tobacco use or prohibit employment discrimination for engaging in “a lawful activity.” Note, however, that some of those laws exempt nonprofits and healthcare employers. In Kentucky, employers are prohibited from discriminating against an individual because the person is a “smoker or nonsmoker, as long as the person complies with any workplace policy concerning smoking.” Likewise, Kentucky employers cannot require employees or applicants to “abstain from smoking or using tobacco products outside the course of employment.”
What about the ADA? Isn’t addiction a disability?
Smoking itself is considered an activity rather than a medical condition. However, under the amended Americans with Disabilities Act (ADA), a disability is a mental or physical impairment that substantially limits one or more major life activities. Both alcoholism and drug addiction (but not current illegal drug abuse) have been found to meet that definition. Therefore, you may be prohibited from discriminating against an employee based on her alcoholism or drug addiction.
Nicotine certainly is as addictive as many drugs and alcohol, so an employee who could demonstrate that she has a nicotine addiction that substantially limits one or more major life activities could ostensibly establish the presence of a protected disability. However, this hasn’t yet been tested in practice, nor has the Equal Employment Opportunity Commission (EEOC) issued guidance on the subject of tobacco use and the ADA.
Nonetheless, as with alcoholism and drug addiction, the presence of a nicotine addiction wouldn’t require you to permit smoking while in the workplace or during work hours. You simply would be prohibited from discriminating against the employee on the basis of her disability—namely, addiction to nicotine.
Smoking surcharges under ACA
Under the Affordable Care Act (ACA), insurers are allowed to charge higher rates (up to 50 percent higher) for tobacco users. Additionally, these surcharges aren’t eligible for coverage by federal subsidies, effectively eliminating the subsidies’ benefit for smokers. In other words, smoking and tobacco use are the only preexisting conditions insurers are still allowed to discriminate against.
Insurers that assess these smoking surcharges as well as all new (nongrandfathered) private health insurance plans are required to cover preventive services, including tobacco cessation. However, it isn’t clear which types of treatment do and do not qualify as tobacco cessation—for example, noncarcinogenic nicotine replacement forms such as the patch or gum, medications such as Chantix and Zyban, and/or counseling.
Bottom line: What’s right for your workplace?
Health organizations such as the American Lung Association and the American Cancer Society worry that the punitive approach will do more harm than good by preventing smokers from obtaining health insurance and other resources they need to quit smoking and protect their overall health.
For employers, however, the right decision chiefly comes down to workplace culture. Medical and healthcare organizations have an important image to maintain, and permitting employees to smoke—or to smell of smoke—in the workplace contradicts that image. On the other hand, many employers may find the impact to employee morale for “invading” their private off-duty conduct just as detrimental to workplace productivity.
If you want to discourage smoking in your workplace, first look to state law to determine the rights, if any, of your employees who smoke. If you find that a zero-tolerance policy is right for your workplace, then you must also determine whether to follow “the honor system” or whether to begin annual (or more regular) testing.
As with any workplace practice, your testing policy should be fairly and consistently applied so as not to discriminate on the basis of characteristics or classes that are protected under federal antidiscrimination laws. In addition, in the interest of employee privacy, you should make employees aware of the testing policy, noting that random or for-cause tests may be administered.
Holly K. Jones, J.D., is a Legal Editor for BLR’s human resources and employment law publications. She understands the existing and emerging needs and challenges of human resources professionals thanks to several years of experience managing, writing, and editing key legal and compliance publications for BLR. Prior to joining BLR, Ms. Jones worked for the Tennessee Legislature’s Office of Legal Services.