The Costs of Smoking

It’s not just a health issue, it’s bad for business.

Anti-smoking campaigns are nothing new. Heartbreaking images and stern warnings have been disseminated via print, television or digital media as long as many of us can remember. The good news is the overall number of adults who smoke cigarettes is falling. The bad news is it is still quite high. This article is not intended to highlight the dangers of smoking, but rather to demonstrate that the costs of smoking are not always health-related. Smoking cigarettes carries an economic cost, too and, as an employer, you are probably paying it.

Smokers Are On Your Payroll

It is estimated that 40 million — or nearly 17 percent — of adults in the United States smoke cigarettes. This percentage is increased in parts of the South, particularly Louisiana and Mississippi, where between 21.4 percent and 25.3 percent of adults are currently smokers. Given the prevalence of smokers in the United States, it is almost a certainty that some of them are your employees. But why does this matter?

Indisputably, smokers are much less healthy than nonsmokers. Their overall health is worse and they are sick more often, which typically results in more sick days taken. Smokers miss approximately twice as much work as their nonsmoking counterparts. To an employer, this translates to cost, and American workers who smoke cost American businesses billions of dollars each year.

They Are Costing You Money

According to the Centers for Disease Control, the total economic cost of smoking is more than $300 billion per year. A big component of this cost is lost productivity. To estimate some of the costs for lost productivity, think of how many breaks a day the average smoking employee takes. This may seem minimal, but a couple of 10-minute breaks each workday over the course of the year means your smoking employee is working nearly a month less than a nonsmoking employee. In addition, studies show that your smoking employees are also less productive because the withdrawal symptoms of nicotine (which occur approximately 30 minutes after a smoke break) cause a loss of focus.  

It’s easy to see how lost productivity carries a projected cost of more than $3,000 per year per smoking employee. But that is not the only component of the total economic costs. The direct healthcare cost of a smoking employee is approximately $2,000 per employee. When you multiply $5,000 by the total number of smoking employees in your workplace, the costs add up quickly.

Employers Are Taking Action

In today’s business environment, employers are driven to minimize costs and maximize productivity. Because smokers can adversely impact both, employers are targeting them.  

As a first step, many employers either allow limited smoke breaks or have banned smoking and using e-cigarettes in the workplace through a policy in the company’s handbook. More recently, employers are charging a higher insurance premium to employees who smoke. In fact, the Affordable Care Act allows insurers to raise smokers’ premiums up to 50 percent over those paid by nonsmokers in recognition of the increased healthcare costs associated with smoking employees. Finally, some companies, where allowable, are refusing to hire smokers altogether.

A couple of 10-minute breaks each workday over the course of the year means your smoking employee is working nearly a month less than a non-smoking employee.

But taking steps to curb smoking in your workplace is not without risk. Consider the following:

• Health Insurance Portability and Accountability Act (HIPAA): HIPAA will only permit employers to maintain a premium differential for smoking versus non-smoking employees as long as the employer establishes a nonsmoking program that meets certain requirements as part of a wellness program, and then reduces premium rates as a “reward” for participation.  

• Americans with Disabilities Act (ADA): The ADA prohibits discrimination in offering benefits to qualified individuals with disabilities. Although courts have yet to classify smoking as a disability, the health issues associated with smoking are frequently classified as such. Additionally, the ADA prohibits discrimination against an accepted disability and makes it illegal to discriminate against employees who are “regarded as” being disabled, even if they are not actually disabled under the law. Given the breadth of its coverage, it is realistic that a court may allow a lawsuit to proceed based on an argument that charging a higher premium to a smoker is sufficient grounds to state a “regarded as” claim.

• Applicable State Law: In Louisiana and Mississippi, for instance, employers may not require employees or applicants to abstain from smoking during nonworking hours. This effectively means that employers in these states may not refuse to hire an applicant simply because he or she is a tobacco user.  In other states, a premium differential may not be imposed on the grounds it constitutes discrimination against smokers.

These examples do not represent an all-inclusive list of the possible legal issues an employer may face when evaluating how to reduce smoking in the workplace. You may have to consider your bargaining obligations with a union, the requirements of a legally sound wellness program, whether you are required to provide leave for certain medical issues caused by smoking under the Family and Medical Leave Act, or whether the Fair Labor Standards Act requires you to pay employees for their smoke breaks.

What’s The Takeaway?

While many employers have taken steps to reduce smoking by their workforce for health reasons, for others “money talks.” Regardless of the motivation, the outcome is the same: Employers who work to curb smoking among their employees are likely to both financially benefit from their efforts and help smokers to stop smoking. But first, employers should evaluate state and federal laws and regulations that apply, and determine whether taking steps to reduce smoking is right for them. While implementing a plan is not without risk, when done the correct way, the savings can be significant.  

Jaklyn Wrigley is an attorney with the Gulfport Office of national labor and employment law firm, Fisher Phillips. She represents employers in state and federal courts, as well as claims pending with state and federal agencies.

Steve CUPP is a partner with Fisher Phillips’ Gulfport office. He has devoted his practice to representing management interests in various areas of labor and employment law , including traditional labor litigation before the National Labor Relations Board, handling Department of Labor wage and hour audits, Title VII litigation, and litigation of Fair Labor Standards Act cases.

Categories: Healthcare, The Magazine