An employer in Massachusetts was recently sued by a newly hired employee for terminating him once they found out he was a smoker.

The employer in this case has a policy against employing anyone who smokes on or off the job, claiming it intends "to save money on medical insurance costs and to promote healthy lifestyles among its employees." The company had required a urine test, which confirmed the presence of nicotine, resulting in firing the employee.

The plaintiff claimed that enforcement of this policy was wrongful on four counts. He alleged a violation of his right to privacy under Massachusetts general laws; interference with his rights under the Massachusetts Civil Rights Act; and wrongful termination under Massachusetts common law. He also claimed a violation of ERISA because he was prevented from receiving the benefits for which he would have become eligible as an employee.

While the court recently dismissed two of the claims, it refused to dismiss the right-to-privacy and ERISA claims, saying the plaintiff was entitled to an opportunity to prove them.

Off-Duty Behavior, On-the-Job Impact. In an effort to control the significant rise in their health care costs in recent years, many employers are trying to regulate the off-duty behavior of their employees when they believe that such behavior creates health risks. Although motivated by legitimate economic concerns, are these employers in danger of overstepping the boundaries of individual privacy?

For example, more employers are contending that the health insurance claims of smokers and overweight workers are higher than those for non-smokers and non-overweight employees. In response to these higher costs, more employers are instituting bans on hiring smokers, even if they only smoke during off-duty hours, and/or charging more for health insurance to smokers, overweight workers, and other categories of employees.

Although smokers and overweight individuals are the two groups most often targeted, they are not alone. Other groups who may be subject to such "lifestyle" regulation include people with hypertension or high serum cholesterol levels, social drinkers, and sports enthusiasts. Arguably, there are health risks associated with all daily activities, from smoking to participating in extreme sports to simply walking down the street. This raises the question of which category of employees might be the next to be charged higher health premiums or to otherwise have their employment affected adversely by their lifestyle choices.

Do employers have free rein to monitor the off-duty conduct of their employees and make decisions based on this? If they are in one of the states that has a "lifestyle" statute, such as New Jersey, they may be prohibited from doing so. In a state without a lifestyle statute, such as Pennsylvania, employers have more freedom to take action based on off-duty conduct. This is particularly true where the employer has a job-related reason for its action, such as when there is a connection between employees’ personal habits and their workplace effectiveness.

Disability Discrimination? In addition to the privacy concerns prompted by these practices, the risk exists that a smoker or obese employee who is treated adversely might have a viable claim for disability or perceived disability discrimination. At the federal level, the Americans with Disabilities Act prohibits employment discrimination against people with "any physical or mental impairment that substantially limits one or more of an individual’s major life activities," and also people who are "regarded as having such an impairment." A smoker could claim that he is addicted to nicotine and his addiction constitutes a disability. Or, a morbidly obese employee could claim that she is disabled because she is substantially impaired in walking.

In addition to potential disability discrimination claims, employees who are subjected to adverse action because of their off-duty conduct could argue discrimination on some other protected basis – such as race, gender, or age – if the employer does not act consistently. For example, if an employer declines to hire a male employee who smokes, then hires a female smoker, it becomes difficult for the employer to maintain that its decision was based on a legitimate business reason rather than on gender.

Wellness Programs. Instead of refusing to hire or deciding to discharge employees whose lifestyles result in increased health care costs, some employers are opting to establish wellness programs. Wellness programs provide a means to cut health care costs without interfering with the employment relationship. Although the Health Insurance Portability and Accountability Act of 1996 (HIPAA) generally prohibits employers from discriminating on the basis of an employee’s health condition in determining benefit premiums and contributions, it makes an exception for wellness programs.

Some employers have imposed higher health insurance premiums on smokers and overweight employees based on the view that they incur higher health care costs, and that requiring them to pay a greater portion of those costs is simply a fair distribution of an employer’s expenses. Another approach offers discounts to employees who participate in smoking cessation or healthy eating programs.

To qualify under the wellness program exception, the employer’s program must meet certain requirements, such as offering an alternative to those employees who, for medical reasons, cannot meet program goals. For instance, if a smoker’s physician certifies that she has been unable to stop smoking because of her addiction to nicotine, the employer must offer a reasonable alternative, such as a smoking cessation program or nicotine patch.

Legal or not, employers’ efforts to effect changes in employees’ personal lifestyles can, at a minimum, lead to an unhappy or under-performing workforce and to the loss of talented employees who are uncomfortable with an employer’s scrutiny of their personal lives.

The issues surrounding the impact of off-duty conduct on employment-related decisions will continue to be debated as employers struggle to balance the need to run their businesses effectively and economically with the desire to be viewed as a positive place to work.

Spada is a partner in the Pepper Hamilton law firm, 301 Carnegie Center, representing management in all areas of employment law and labor relations. He has handled numerous cases in the discrimination area. He represents employers before the Equal Employment Opportunity Commission, the New Jersey Division on Civil Rights, the Pennsylvania Human Relations Commission and other agencies around the country.

Spada received his J.D. from Temple University in 1986 and his bachelor’s in 1982 from the University of Pennsylvania.

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