Can an Employer Refuse to Hire Smokers?

December 31, 2018

More and more companies than ever won’t hire people who smoke without taking into consideration whether or not the hiring policy is legal. Let’s take a closer look.

First, and foremost let’s be clear there’s no federal law that protects cigarette smokers or entitles them to equal protections when it comes to hiring, promotions, etc. That’s because the Equal Employment Opportunity Commission doesn’t recognize smokers as a protected class.

That said, there are 29 states (along with the District of Columbia) that do offer protections for smokers. If your company is in one of those states, you can’t refuse to hire people just because they smoke (although you can turn them down for other, legitimate reasons).

According to the American Lung Association, here’s the list of states that provide employment protections to smokers:

§  California

§  Colorado

§  Connecticut

§  District of Columbia

§  Illinois

§  Indiana

§  Kentucky

§  Louisiana

§  Maine

§  Minnesota

§  Mississippi

§  Missouri

§  Montana

§  Nevada

§  New Hampshire

§  New Jersey

§  New Mexico

§  New York

§  North Carolina

§  North Dakota

§  Oklahoma

§  Oregon

§  Rhode Island

§  South Carolina

§  South Dakota

§  Tennessee

§  Virginia

§  West Virginia

§  Wisconsin

§  Wyoming

 If you’re not located in one of those states, you’re likely permitted to enact a smoke-free hiring policy and keep people who smoke out of your workplace. But is a ban on hiring smokers really the right way to go? Opinions differ.

On the one hand, there was a study by the Journal of Tobacco Policy & Research that found smokers take more sick days than their non-smoking co-workers. It also found that even if a smoker is in relatively good health (isn’t obese, doesn’t have chronic health conditions like diabetes, etc.), there’s a good chance he or she will still have higher medical costs than a comparable non-smoker over a three-year period.

But a smoking ban is worthwhile only if smokers quit for good. If the prohibition causes people to quit until they’re hired — and then they take up smoking again as soon as they pass the nicotine test — it’s not an effective cost-cutting tactic.

The results point to a need for constant testing to ensure former smokers don’t fall back into the habit after they’re hired — which can get expensive.

 Cons of a ban on hiring smokers

Another study from anti-smoking journal Tobacco Control found that a tobacco-free hiring policy might not be a good idea. Here’s why:

  • It’s a slippery slope. If the decision were based on health-related costs, couldn’t a case be made for banning people with weight-related problems, such as high cholesterol or diabetes? And wouldn’t that raise discrimination concerns?
  • Would you be turning away good talent because of a smoking addiction — an addiction that could be licked with some help?
    Sure, when unemployment is high and lots of people are job hunting, you can be choosy. But do you really want to lose that top salesperson or IT manager to a competitor because of smoking?
    And what about when the employment market turns around, and you find yourself scrambling for good people?
  • It’s the end of the year and as we enter into the New Year we sit down and come up with our “New Year’s Resolution.” Diet control, addictive habits, and maybe time management to name a few. Given the current political turmoil, how about a resolution that we be a little more tolerant of each other’s political views. History has already shown that a divided nation cannot stand.
  • Every analysis of such programs shows they’re cost-effective in improving absentee rates and time lost because of smoking-related illnesses.
  • Researchers at Tobacco Control instead say employers should push hard to get employees into smoking-cessation programs.

Every analysis of such programs shows they’re cost-effective in improving absentee rates and time lost because of smoking-related illnesses.

Well, it’s the end of the year and as we enter into the New Year we sit down and come up with our “New Year’s Resolution.” Diet control, addictive habits, and maybe time management to name a few. Given the current political turmoil, how about a resolution that we be a little more tolerant of each other’s political views. History has already shown that a divided nation cannot stand. Good luck to you in 2019!


Reminder: Docking An Exempt Employees’ Pay!

December 24, 2018

A common question that we receive almost weekly is whether or not an employer can dock and exempt employees pay.

By way of review, let’s take a look at the federal rules with the understanding that individual state laws could vary slightly.

In generally, it violates the Fair Labor Standards Act to dock (that is, take a deduction from) the salary of an exempt employee. Under the FLSA, an exempt employee earns their entire salary for a work week as soon as that employee works even one minute during that week.

The logic is simple. Once you start deducting from an exempt employee’s salary for minutes or hours not worked, you are not treating that employee as salaried, but as hourly. And, hourly employees are not exempt. Therefore, if you don’t pay an exempt employee their entire salary for every work week in which any work is performed, then you are treating them as hourly and they are not exempt.

There are, however, seven limited exceptions permitting deductions from an exempt employee’s weekly salary:

  1. When the exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability.
  2. For absences of one or more full days occasioned by sickness or disability (including work-related accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability.
  3. While an employer cannot make deductions from pay for absences of an exempt employee for jury duty, attendance as a witness, or temporary military leave, an employer can offset any amounts received by an employee as jury fees, witness fees, or military pay for a particular week against the salary due for that particular week.
  4. For penalties imposed in good faith for infractions of major safety rules.
  5. For unpaid disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules imposed pursuant to a written policy applicable to all employees.
  6. For any time not actually worked during the first or last week of employment.
  7. For any time taken as unpaid FMLA leave.

It is critical for employers to understand these rules. A mistaken deduction could prove costly. Keep in mind, if an employer makes an improper deduction from an exempt employee’s salary, the exemption will be lost during the time period during which the improper deduction was made. Critically, the lost exemption does not only apply to the affected employees, but also to all employees in the same job classification working for the same managers responsible for the actual deduction.

Before you consider deductions from an exempt employee’s salary, consult with your employment counsel to make sure you have these rules covered and the deduction is proper.

Two Recent Cases on “Rounding Up” Employees’ Time! Listen Up!

December 17, 2018

One of the most common questions we receive is on the issue of rounding up employees’ time to the nearest quarter hour. This has always been permissible, provided the policy was neutral in effect, meaning that on balance employees were not underpaid as a result.  Back in the days not so long ago when payroll was calculated by scribes in green visors and sharp pencils, rounding made perfect sense, as trying to pay to the minute when someone on a 9:00 am – 5:00 pm shift clocks in a 8:57 am (so as not to violate the punctuality policy) and doesn’t leave their work station until 5:00 (again to not violate policy) and clocks out at 5:05, would have been far more cumbersome.  So rounding to the nearest quarter hour was permitted, provided “it all comes out even in the wash” so as not to deprive employees, on balance, of time worked.

This has been a long established practice, including after virtually every business has converted to automated time keeping systems which have the capability to immediately calculate and pay working time to the minute, if not second.  Therefore, it is no longer administratively infeasible for the vast majority of employers, including California employers, to pay to the minute.  The regulations which provide the authority for the rounding rule also contain a requirement, in addition to the “all comes out even in the wash”, that it be infeasible to pay to the minute – which of course it was when payroll was being calculated manually.  Now, however, for employers with automated payroll systems, it is not infeasible to pay to the minute.  The California Supreme Court recently noted this in rejecting the notion that employers need not pay for “de minimis” time worked.

In that case, reasons most employers, it is permissible to round off those extra minutes at the beginning and end of the shift, focusing on the first part of the general rule that rounding to the quarter hour is permissible, but ignoring the condition that the rounding cannot result, on balance, of underpaying employees for time worked.  So, in this example, the employees, every day, are shorted a few minutes at the beginning and end of their shifts, and by no means is the rounding policy having the actual effect of “having it all come out in the wash.”  This creates significant liability not only for unpaid wages, but triggers a host of penalties making the overall liability staggering, potentially threatening the very existence of the business.

Further causing California employers to “whistle past the graveyard” of rounding practices has been the curious development of California case law in this area, first with two cases involving See’s Candy, and then two more recent cases: AHMC Healthcare, Inc. v. Superior Court and Donohue v. AMN Services, LLC.

In See’s, the court upheld as lawful the employer’s practice of rounding time entries, where the employer had a policy of allowing employees to clock in ten minutes before beginning work and clock out 10 minutes after ceasing working, with additional policies stating prohibiting the actual performance of work during those “grace” periods.  Expert analysis of time records showed that the time rounding resulted in a net benefit to the employees and therefore was upheld.

The courts in the more recent AHMC and Donohue cases also upheld employer rounding practices based on similar expert analysis of time records showing a net benefit to employees.  These cases have been simplified in many popular headlines, however, don’t get too excited.

In ALL these court cases, the employers won only because expert analysis of time records for a period of time luckily revealed that the rounding worked to the employees’ benefit (most of the time).  The result easily could come out the other way, particularly where rounding policies are combined with strict punctuality policies (as they typically are).  So to come to the conclusion that your rounding policy is fine because the decisions in these cases all said rounding is fine is to entirely miss the point, and potentially create continuing liability.  In other words, those employers had a valid defense whereas few employers do.  Rounding is generally impermissible also, but not if you are overpaying your employees.

In, AHMC: Rounding to the nearest quarter hour for clock in and out and breaks. In this case the employees were compensated for over 5,000 more minutes than they worked. So AHMC “won”, but they overpaid by 5,000 minutes and certainly had to pay a fortune in legal fees on top of that to “win”.

In, Donohue: Rounding to the nearest 10 minute increment for clock in and out and breaks. This practice overall resulted in a net surplus of 1,929 hours paid that were not worked.

The real take away from all this is that if you continue to have a rounding policy at all, it better result in neutral payment or overpayment – which is a virtual impossibility when combined with a strict punctuality policy.  Even then, you still face risk of class action litigation and the fees that will be incurred to defend the litigation.  Even if you win, it is not likely to feel like a true “win.”  As a result, the best practice is to pay to the minute. Why not? The technology is here to help you. The answer is to find a method of clocking in and out that results in minimizing time on the clock and not actually working….rest assured that additional labor expense will be far less than the cost of defending, and likely losing, a rounding policy lawsuit that almost certainly is resulting in overall underpayment to your employees.

I hope I made my point!


Forcing Older Workers to Retire? Think Twice!

December 10, 2018

As more and more baby boomers are approaching, or have approached, “retirement age” clients/employers are making inquiries as to how to force older workers out the door. Honestly, the question normally refers to the non-producers. One employer recently agreed to settle an EEOC age discrimination case. The allegation was the employer violated the ADEA by maintaining a policy that required employees to retire at age 65. The lawsuit stemmed from the firing of an employee four days after her 65th birthday.

The EEOC attorney remarked, “December 2017 marked the 50th anniversary of the ADEA, Five decades later, the EEOC remains committed to vigorously enforcing that all-important law. Private employers need to understand that mandatory retirement policies run afoul of the ADEA and will be met with challenge.”

He’s absolutely correct.

It’s still a fairly popular misconception that businesses can force employees to retire at a certain age.

In truth, with the exception of a few limited circumstances, mandatory retirement ages are about as close to a slam-dunk case of illegal age discrimination you can find. The exceptions permit—but do not require—mandatory retirement:

  • at age 65 of executives or other employees in high, policy-making positions.
  • at age 55 for publicly employed firefighters and law enforcement officers.


Forcing an employee out is the same as requiring an employee to retire. While lessening duties and responsibilities, demotions, and reductions in pay could cause an older employee to retire, it could also cause that same employee to claim a constructive discharge.

Yet, companies do need to plan for their futures. This planning is becoming more difficult as more employees are living longer and therefore working longer. Research has shown:

  • 53 percent expect to retire after age 65 or do not plan to retire at all.
  • 56 percent plan to work at least part-time in retirement.
  • Of those employee who plan to work past age 65, more than three-fourths are motivated by financial reasons or health reasons (such as “being active,” and “keeping my brain alert”).

Despite the aging nature of our workforce, many employers are unprepared, ill equipped, or unwilling to accommodate its needs. Indeed, 38% of baby boomers report that their employers do absolutely nothing to help facilitate their transition to retirement.

Ok, so the issue becomes, “what steps can employers take to help facilitate the transition of aging employees out of the workplace, without committing age discrimination?” Consider the following four suggestions:

  1. Help with retirement planning. Offer a retirement plan (to include part-time workers, if feasible). Consider auto-enrolling your employees to increase participation, and escalating contribution rates to increase salary deferrals. Structure matching contributions to promote higher salary deferrals (i.e., 50 percent of the first six percent instead of 100 percent of the first three percent).
  2. Educate your employees about saving and investing. Any 401(k) provider worthy of your (and your employees’) investment will help with this task. Offer guidance and information on how to calculate a retirement savings goal and on the basic principles of saving and investing. Most importantly, ensure that your employees understand that taking loans and premature withdrawals from their retirement accounts is an absolute sin.
  3. Offer benefits to enhance employees’ long-term financial security. Consider disability insurance, life insurance, employee assistance programs, workplace wellness and financial wellness programs, long-term care, and other insurances, all of which can help protect employees’ overall financial security as they age.
  4. Create employment opportunities to assist employees to phase into retirement. Consider offering voluntary flexible work schedules and arrangements, transitions from full-time to part-time, and shifts of aging employees to work in different capacities.

And, most critically, get rid of your mandatory retirement policy!



Holiday Pre-Cautionary Reminders!

December 3, 2018

Every year I try to remind clients and readers of my blog to be careful around the upcoming holiday! Now, between my domestic terrorism program, LA Talk Radio Show, and the services offered through Potts & Associates, I want to caution business owners, managers and supervisors to keep in mind the liabilities associated with “Holiday” parties. Providing alcohol could be problematic if an employee subsequently leaves the party and has an accident.

In addition, since I am sure most will be shopping for gifts at the local mall, I want you to stay aware of your surroundings. The malls are becoming “soft targets.” For those of you that have taken our active shooter training do not forget the safety tips we gave you.

On another note, ‘Tis the season for giving.” One employer has decided to give a gift to all of his employees. The company is located in Wisconsin and the owner has decided that the best gift to give his staff is a HANDGUN! He has already begun the process.

The owner said the decision to give employees handguns as a gift was made as part of an effort to “promote personal safety and team building.

The owner remarked, “Most employees were excited at the prospect of receiving their handgun.” One employee, said she felt empowered by the gift, which she believes will help keep her safe.…

At least two employees initially declined the gift, but are considering accepting it after taking a gun safety course the business had employees take before getting their guns.

When asked about violence in the workplace issues the owner said he wasn’t worried about workplace violence because his business has a small staff and all of the employees know each other well. He also stated, “For us, now, we have an entire armed staff,” he said. “I think that’s pretty good.”

Are you kidding me? Is an armed staff really “pretty good?” I, for one, do not believe that guns belong around the American workplace, period. Whether it’s an office, warehouse, factory, school, or whatever. Guns do not belong at or near work. Those of you that have heard me say this during the active shooter training or on my LA Talk Radio show know how I feel about guns at work. This employer, Wisconsin or not, is opening himself up to litigation if someone uses those guns at or away from work.

Please use some common sense with your holiday plans and remember to be aware, be vigilant, and be safe!