Healthcare Crisis Leads Employers to Adopt Aggressive Strategies

Recently, one large Michigan employer announced that, starting on Jan. 1, 2005, it would begin random drug tests for nicotine and would fire anyone who either failed the test or who refused to quit smoking. In response, four employees voluntarily resigned rather than take the nicotine test.

"As healthcare costs continue to rise, employers are realizing that they need to implement aggressive strategies to control their costs."
In another case, a Nebraska transportation company stopped hiring smokers in the seven states where it has its offices. In both cases, company executives have cited the prohibitive and rising cost of healthcare. To support its position that smokers increase healthcare claims, the Michigan employer is pointing to research showing that smoker employees each cost their employer $4,000 per year in absenteeism, medical benefits and the earnings that are lost to sickness and premature death. Moreover, the Nebraska company estimates that it will save $922 annually for each position that it fills with a nonsmoker over one who smokes.

Federal and state laws bar employers from refusing to hire or terminating employees based on race, religion or gender, among other reasons. However, only about half of the country, approximately 28 states, including the District of Columbia, has enacted similar anti-discrimination laws for smokers. Neither Michigan nor Nebraska has such laws, thereby allowing employers in those states to lawfully refuse to hire or terminate smoker employees. In most cases, employers are asking workers to report their smoking habits voluntarily or adding disclaimers such as "nonsmokers only" to job postings. Others are requiring workers to take a breathalyzer test that can catch traces of carbon monoxide in their lungs or submit to urine tests to detect nicotine.

In addition to targeting smokers in particular, companies are also taking other steps to increase the overall health of their workforce, including reimbursing employees for a portion of their health club costs, paying bonuses for meeting fitness goals, and offering fitness classes. Obesity is second only to tobacco in the leading causes of avoidable deaths. One recent study showed that companies pay an estimated $12.7 billion annually due to obesity.

Another strategy has included making employees more knowledgeable and responsible for their prescription drug costs. One company has pointed to better communication as the means to save approximately $1 million in prescription costs. Through its "Health Care Awareness" campaign, the company encouraged employees to become smarter consumers of healthcare. The plan began with a commitment from the company to educate employees to make better use of their benefits, including their prescription drug benefits.

The company focused on illnesses that were the most repeat drug users, such as high blood pressure, high cholesterol and depression, and educated its workers on what their drug choices were and to make certain that they asked their healthcare provider to prescribe the most effective medicine at the lowest costs. To reach its workers, the company created small posters and tent cards to be placed in employee break rooms, lunch rooms, and bathrooms. The posters were created in both English and Spanish and listed the top three drug options with their prices.

This communication strategy has paid off significantly for the employer and effectively lowered healthcare costs by encouraging the employees to make wise choices and to take control of their healthcare options.

As healthcare costs continue to rise, employers are realizing that they need to implement aggressive strategies to control their costs. From communication strategies to encouraging employees to make healthier lifestyle choices, employers are forcing their workers to be responsible participants in the healthcare program offered by the employer. Working together as a team, companies and employees can hopefully find a balance where the health benefits that the employee needs are affordable for the company's bottom line.

With this issue, ID Access is initiating a monthly column by legal experts at Krupin O'Brien LLC on a wide range of issues that can affect all foodservice distributorships.
Krupin O'Brien LLC is a nationally recognized law firm specializing in employment and labor law and exclusively representing employers in the areas of labor relations, employment law, business immigration and related litigation. The firm has a particular expertise in representing restaurants and the hospitality industry, and represents companies and ownership groups of all sizes, both local and nationally. For further information contact Ana Salper, an attorney with Krupin O'Brien LLC, where she represents clients on all forms of litigation, and counsels clients on diverse employment and labor matters. Ms. Salper oversees the firm's New York office and is a member of the New York State Bar. Contact her at: 212-745-1387 or
ID Access invites its readers to address questions to Krupin O'Brien LLC by contacting The Editor.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.


Exclusive Content


Restaurants have a hot opportunity to improve their reputation as employers

Reality Check: New mandates for protecting workers from dangerous on-the-job heat are about to be dropped on restaurants and other employers. The industry could greatly help its labor plight by acting first.


Some McDonald's customers are doubling up on the discounts

The Bottom Line: In some markets, customers can get the fast-food chain's $5 value meal for $4. The situation illustrates a key rule in the restaurant business: Customers are savvy and will find loopholes.


Ignore the Red Lobster problem. Sale-leasebacks are not all that bad

The decade-old sale-leaseback at the seafood chain has raised questions about the practice. But experts say it remains a legitimate financing option for operators when done correctly.


More from our partners