Reference no: EM132195211
You are the CEO of a mid-sized company in Texas. With medical costs rising 10 to 15 percent per year, one of the members of your Board of Directors mentioned that some companies are now refusing to hire smokers, and that the board should discuss this option at the next month’s meeting.
Nationwide, about 6,000 companies refuse to hire smokers.
Weyco, an employee benefits company in Okemos, Michigan, requires all applicants to take a nicotine test. Weyco’s CFO says, “We’re not saying people can’t smoke. We’re just saying they can’t smoke and work here. As an employee-benefits company, we need to take a leadership role in helping people understand the cost impact of smoking.”
The Cleveland Clinic, one of the top hospitals in the United States, doesn’t hire smokers. Paul Terpeluk, the director of corporate and employee health, says that all applicants are tested for nicotine and that 250 people have lost job opportunities because they smoke.
The Massachusetts Hospital Association also refuses to hire smokers. The company’s CEO says, “Smoking is a personal choice, and as an employer I have a personal choice within the law about who we hire and who we don’t.”
As indicated by your board member, costs are driving the trend not to hire smokers. According to the U.S. Centers for Disease Control, a smoker costs about $4,000 more a year to employ because of increased health-care costs and lost productivity. Breaking that down, a smoker will have 50 percent higher absenteeism, and, when present, will work 39 fewer minutes per day because of smoke breaks, which leads to 1,817 lost hours of annual productivity. A smoker will have higher accident rates, cause $1,000 a year in property damage (from cigarette burns and smoke damage), and will cost up to $5,000 more a year for annual insurance premiums. John Banzhaf, executive director of an antismoking group in Washington, and a law professor at George Washington University, says, “Smoking is the biggest factor in controllable health-care costs.”
Although few would disagree about the costs, others argue it is wrong not to hire smokers. Jay Whitehead, publisher of a magazine for human resources managers, says, “There is discrimination at many companies—and maybe even most companies—against people who smoke.” Even if applicants aren’t asked whether they smoke, it “doesn’t mean that hiring managers turn off their sense of smell.” Law professor Don Garner believes that not hiring smokers is “an overreaction on the part of employers whose interest is cutting costs. If someone has the ability to do the job, he should get it. What you do in your home is your own business. … Not hiring smokers is ‘respiratory apartheid.’”
Well, with the meeting just a month away, you’ve got to prepare for the Board of Directors’ questions.
You figure that their first question will be straightforward: Is it legal to not hire smokers? Your HR Director tells you that the answer is that it depends. Federal law seems to suggest that it is legal to not hire smokers. Unlike race, gender, ethnicity, religion, and sexual preference, smokers are not a protected class. Furthermore, smokers are generally not protected by the Americans with Disability Act (ADA). Chris Kuczynski, assistant legal counsel for the Equal Employment Opportunity Commission’s ADA Policy says, “I am not aware of any court saying smoking or addiction to tobacco is a disability. If one excludes someone because they are a smoker, he or she is probably not excluding them because of a disability.” While federal laws can allow employers to not hire smokers, approximately 30 states have made it illegal to not hire smokers (see handout). So-called lifestyle-discrimination laws prevent employers from using non-work behavior, that is, behavior that occurs outside of work hours such as smoking, to not hire employees. Your state isn’t on the list, so the decision will be not be based on the law.
Your company prides itself on making decisions based on the triple bottom line: People, Profit, Planet. Clearly, this latest issue could have positive and negative implications on all three.
Ethical Decision Making
Board Member Susan Hernandez tends to view issues from what affirms and respects individual/human rights. Therefore, discuss the issue from an ethical decision-making perspective.
The framework for ethical decision making lists five sources of ethical standards. Which one is primarily guiding your decision? Explain.
Social Responsibility
Board Member Aaron Ware tends to focus on the benefits to firms and “society,” while ignoring or minimizing the costs or consequences to individuals. Therefore, discuss to the issue from a social responsibility standpoint.
Recommendation to the Board
As the CEO, the Board will ultimately lean in your direction. What is your recommendation? What are the implications of this decision (who does it primarily benefit? What are the positive implications? What are the negative implications?)?