Lighten up: should Massachusetts implement a smoking surcharge for state employees?

• Author: Wall, Brian

"To take further steps in preserving and improving the health of all of our employees, Anna Jaques has recently implemented a non-smoking hiring policy requiring all individuals who have been offered a job at Anna Jaques Hospital ... to take a nicotine test during their pre-hire screening process. This non-smoking hiring policy is an addition to existing pre-hiring screening measures. Administered by the hospital's Occupational Health Services, the urine-based nicotine test detects the presence of all forms of nicotine.

... Offers of positions to prospective employees who test positive for nicotine or drugs will be rescinded. Those individuals testing positive for drugs or nicotine will be eligible to re-apply for positions at the hospital [six] months after the date of the positive report." (1)

1. Introduction

   On November 18, 2010, Anna Jaques Hospital in Newburyport, Massachusetts revealed its new hiring policy. (2) Under the policy, the hospital will not hire any prospective employees who test positive for nicotine. (3) Anna Jaques Hospital's policy is part of a national trend among private employers that have instituted tobacco-free employment policies and tobacco surcharges on health insurance. (4) Many employers have gone even further, instituting policies that target not only potential employees, but also current employees, who must attempt to quit using tobacco or face termination. (5)

   Simply stated, the reasoning behind these tobacco-free policies is the employer's bottom line. (6) With healthcare costs spiraling in Massachusetts and throughout the United States, many employers are looking for ways to reduce healthcare-related expenses. (7) This trend is not limited to private employers either. (8) Although no state has yet implemented a tobacco-free employment policy, a growing number of states have established smoking surcharges for public employees covered under state healthcare benefit plans. (9) This Note will explore whether Massachusetts should join this trend and implement a tobacco free employment policy or a smoking surcharge in order save taxpayer money. (10)

   This Note will begin with an in-depth discussion of the at-will employment doctrine by tracing the history of its development. (11) It will then examine the current status of the doctrine throughout the United States by detailing both the common-law and statutory limitations to at-will employment. (12) Additionally, it will explore the emergence of so called "lifestyle discrimination" statutes and the status of lifestyle-discrimination law in Massachusetts. (13)

   Next, this Note will discuss rising healthcare costs throughout the United States and Massachusetts. (14) It will examine the cost of healthcare for Massachusetts as the commonwealth's largest employer. (15) It will also discuss the healthcare-related costs attributed to smoking and will look at the recent trend among states of integrating smoking surcharges into state healthcare benefit plans. (16)

   Finally, this Note will analyze two potential options for Massachusetts to reduce its employee healthcare costs within the context of Massachusetts employment law, while also addressing slippery-slope concerns raised by opponents of these options. (17) First, it will consider whether Massachusetts should implement a smoke-free employment policy. (18) Second, it will explore the potential benefits of imposing a smoking surcharge on Massachusetts state employees. (19)

2. History

   1. At-Will Employment

      Massachusetts common law governing employment contracts defines an at-will employee as an employee who is not employed for a specified period of time or for the purpose of rendering any particular service. (20) At-will employment in Massachusetts can be terminated by the employee at any time for any reason, or for no reason at all. (21) Similarly, absent a contractual provision to the contrary, an employer can terminate at-will employment without notice for virtually any reason, or for no reason. (22) Therefore in Massachusetts, "'[t]he discharge of an at-will employee without cause is not alone a sufficient basis for imposing liability' against an employer." (23)

      Today, employment in all states, except Montana, is presumed to be atwill. (24) The United States is one of the few countries in the world that adheres to the at-will presumption; most other countries require employers to justify terminations by showing cause. (25) American courts and legislatures have chosen to retain the at-will presumption for a variety of reasons, including the preservation of freedom of contract, deference to employer judgment, and the belief that both employers and employees prefer at-will employment to job security. (26)

      1. Common-Law Limitations on At-Will Employment

         Over time, three major exceptions to the at-will employment doctrine have developed at common law: the public-policy exception, the implied-contract exception, and the covenant-of-good-faith exception. (27) Generally, these exceptions address terminations that conform to the at-will employment doctrine, but have been deemed unjust by a state's courts. (28)

         The public-policy exception prohibits an employer from terminating an employee when such termination violates the explicit and well-established public policy of the state. (29) Under the Massachusetts public-policy exception, an employee is wrongfully discharged when the termination "violate[s] a 'well-defined, clearly established public policy.'" (30) Massachusetts courts have construed this exception to forbid the termination of an employee for complying with the law, refusing to violate the law, and asserting a legal right. (31) Compared to many other states, Massachusetts courts have interpreted the public policy exception to the at-will presumption narrowly. (32) The Massachusetts Supreme Judicial Court (SJC) explained the need for such a narrow interpretation of the public policy exception, stating, "[t]his court consistently has interpreted the public policy exception narrowly, reasoning that to do otherwise would 'convert the general rule ... into a rule that requires just cause to terminate an at-will employee.'" (33)

         The implied-contract exception to the at-will employment doctrine recognizes the existence of an implied contract between employer and employee where no express employment contract exists. (34) When an employer makes written or oral representations to an employee concerning job security or termination procedures, courts may determine that those representations impliedly create an employment contract. (35) The implied-contract exception often arises when courts decide whether representations made in employee handbooks create an implied employment contract, absent a valid waiver stating that the content of the handbook does not create a contract. (36) While the implied-contract exception is recognized in thirty-eight of the fifty U.S. states, Massachusetts courts do not recognize the exception. (37)

         The covenant-of-good-faith exception to the at-will employment doctrine reads a covenant of good faith and fair dealing into every employment relationship. (38) Generally, this exception has been construed to apply the "just cause" standard to employee termination, or to ban terminations made in bad faith or motivated by malice. (39) Massachusetts is one of just eleven states to recognize this exception. (40) The SJC has held that the exception applies only if an employee's termination is in bad faith or without "good cause." (41) Further, the court has held that the exception applies only if the employer is unjustly enriched by withholding employee compensation for past services. (42)

      2. Statutory Limitations on At-Will Employment

         1. Federal Statutory Limitations

            Various federal statutes limit the doctrine of at-will employment for employers. (43) Most of these laws outlaw discrimination in both hiring and firing based on an employee's specific characteristics. (44) Title VII of the Civil Rights Act of 1964 (Title VII) prohibits employers from terminating an employee or refusing to hire a prospective employee on the basis of his or her race, color, religion, sex, or national origin. (45) Title VII also forbids employers from discriminating against an employee or prospective employee because of his or her association with another individual of a particular race, color, religion, sex, or national origin. (46) Congress provided whole and partial exceptions to Title VII for religious organizations, Native American tribes, and bona fide nonprofit private-membership organizations. (47) Additionally, Congress created a statutory defense that allows employers to discriminate on the basis of a protected characteristic, if the particular characteristic is a "bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise." (48)

            Title VII does not identify age as a characteristic protected from employment discrimination. (49) However, Title VII contains a provision that required the Secretary of Labor to conduct a detailed study of age discrimination. (50) The resulting study found that discrimination on the basis of age was prevalent among employers throughout the country. (51) In response to the Secretary's findings, Congress enacted the Age Discrimination in Employment Act of 1967 (ADEA), which prohibits an employer from terminating or refusing to hire an employee over forty years old based on his or her age. (52)

            In 1990, Congress adopted another major exception to the at-will employment doctrine: the Americans with Disabilities Act (ADA). (53) According to Congress, the ADA was a nationwide mandate for the eradication of discrimination against individuals with disabilities. (54) Title I of the ADA prohibits employers from terminating or refusing to hire a qualified individual because of his or her disability. (55) The ADA defines a "qualified individual" as "an individual who, with or without reasonable...