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Japanese Companies Look to Cut Costs by Curbing Smoking

Concerned about lost productivity and higher employee healthcare costs, many employers are taking serious steps to eliminate smoking among employees. In Japan, a number of companies and educational institutions are now even basing hiring decisions on whether an applicant smokes.

Some scientific evidence suggests that employers’ concerns about the added costs costs are valid. A 2018 study conducted by Ohio State University found that smokers in the U.S. cost private sector employers an average of $5,816 extra per year, excluding additional costs that the employees themselves may pay. These employer costs include “excess absenteeism,” “presenteeism” (lower productivity on the job), “smoking breaks,” “excess healthcare costs” and “pension benefits,” with time devoted to smoking breaks making up the majority of costs. Stopping smoking eliminates lost time for smoke breaks entirely, unlike other high-cost factors like healthcare and absenteeism, which could continue after an employee stops smoking.

Smoking is more prevalent in Japan than in the United States, especially for men.

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Although the rate has been falling steadily, a 2018 national study showed that 28.2% of men and 9% of women in Japan smoke, compared to 15.8% of men and 12.2% of women in the United States, according to the Centers for Disease Control and Prevention.

In April, more than 20 Japanese companies signed onto a corporate partnership to promote anti-smoking steps. Starting in spring 2020, for example, insurance company Sompo Japan Nipponkoa Himawari will not hire any new employee who smokes, and will require its high-level officials to sign a document pledging not to smoke during work hours. The private sector in Japan is not alone in pushing for less employee smoking—Nagasaki University announced last month that it would stop hiring faculty who smoke and banned smoking on campus, and Oita University has “put priority on nonsmokers” when hiring.

Part of this effort is incentivizing quitting.

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Employees who quit smoking at Japanese company Rohto Pharmaceutical Co., for example, get tokens they can use at the company cafeteria or for other benefits. Marketing firm Piala Inc. is also offering an extra 6 paid days off to non-smoking employees, and 4 of its 42 smokers have reportedly quit smoking thus far.

While programs to incentivize quitting may seem intuitive, according to Ohio State’s Micah Berman, lead author of the school’s study, these efforts may also be pricey for employers. “Employers should be understanding about how difficult it is to quit smoking and how much support is needed,” he said.
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“It’s definitely not just a cost issue, but employers should be informed about what the costs are when they are considering these policies.” These can include the costs of direct incentives like the ones noted above, or the additional healthcare cost of prescription drugs or counseling to help quit. However, in the long-term, companies that implement cessation programs—especially those that have a large number of smoking employees to start—are likely to see the benefits outweigh initial investment costs within 4 years.

Companies may save money by encouraging employees to quit smoking, especially in lost time and healthcare spending, but they should examine the costs and benefits of instituting formal or informal policies to change their employees’ habits. Running afoul of legal protections, as well as making workplaces unfriendly to employees who smoke, being perceived as interfering with employees’ activities outside of work and other considerations may outweigh employers’ concerns for their workers’ health and excess spending.

Japanese companies have stated that they believe these steps are legal, and some U.

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S.-based companies, including Scotts Miracle-Gro and Weyco, Inc., have reportedly made similar efforts to discourage their workforces from smoking. Some companies in the U.S. may be unable to explore such potential programs, however. According to legal experts, “around half of [U.S.] states currently legally protect employees from being denied positions, or having employment contracts terminated, due to tobacco use.”

New in Workers Comp: “Lifestyle Risk” and the Dangers of Telecommuting

NEW ORLEANS—While controlling workers compensation costs often focuses on mitigating the risk of slip-and-falls or ensuring employees have proper safety gear, some notable exposures exist in employees’ everyday personal lifestyle choices. In the Thought Leader Theater at RIMS 2015, Fred Hubbs, a partner in the lawfirm Hall Booth Smith, P.C., discussed how different trends—from the obesity epidemic to telecommuting—can increase risk exposure in the workplace.

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As the workers comp system is based on principles of no fault and no personal responsibility and there are broad state definitions of what is medically necessary or what an employer is responsible for, employers are often vulnerable to what Hubbs calls “lifestyle risk.” Obesity, smoking, non-compliance with treatment for diabetes, and telecommuting can all put employees at risk, and either contribute to a compensable event or complicate the recovery process.

Obesity, which affects approximately 37% of Americans and is expected to his 50% by 2030, is a well-documented factor in workers comp, with obese workers filing twice as many claims that tend to be up to seven times more expensive and see these workers missing thirteen more days a year, while indemnity benefits paid can be five times higher. And some states have ordered employers to pay for weight loss that is medically necessary to facilitate recovery.

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Smokers are also drastically more likely to be injured at work, and smoking while on the job can lead to specific accidents in the workplace that are compensable. In fact, courts have ruled that, if smoking is only a slight deviation from job duties, an accident that occurs while a worker is on a smoke break is compensable. In at least two states, employers are also now required to pay for smoking cessation programs if doctors deem it necessary to help with recovery from surgery.

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For diabetic employees, a refusal to comply with treatment can expose employers, whether because of the increased risk of seizure, making a minor injury worse, or delaying recovery. Some treatments for injuries sustained on the job can also aggravate pre-existing diabetes, which can be a compensable event.

For all of these issues, Hubbs recommended that employers get more proactive to help employees be healthier, reduce workers comp costs, and even benefit from some incentives from new healthcare laws. Stop-smoking campaigns and weight-loss or activity-boosting initiatives can all aid in these efforts, and these employee-sponsored wellness programs are promoted under new healthcare laws, which may offer direct incentive to businesses that introduce them. Ensuring that employees are complying with doctors’ orders regarding these required efforts is also important, and may be actionable if employees are refusing. There are laws that require employees to comply if they are receiving workers comp benefits, Hubbs said, and employers should seriously examine their legal ability to stop compensation if an employee refuses to submit to a reasonable examination or treatment.

Finally, Hubbs cautioned that many employers should be more cognizant of the risks of telecommuting. While working remotely is certainly nothing new, it is continuing to grow, especially after President Obama signed the Telework Enhancement Act requiring government agencies to establish policies for working outside the office. These arrangements can severely complicate workers comp questions, however, as the lines blur surrounding whether an accident that occurs in the home is compensable and whether an employee is on or off the clock at any given time. To mitigate some of these risks, he recommended that employers:

  • Visit the “jobsite” to evaluate where employees will be working
  • Email or otherwise communicate when an employee is on or off the clock
  • Create a written and signed agreement that designates hours and breaks, designates rooms in the house as “office” space, specify what duties are included in the telework, designate “personal comfort” areas, and attach panel of physicians in states where appropriate