Untangling the Law Behind Tobacco and other Lawful Product Use in Workplace Wellness Programs

The following article does NOT constitute legal advice and should not be used as such. It is for educational purposes only. Readers should retain legal counsel to obtain definitive answers.

Can I legally incentivize employees to not use products like tobacco, alcohol or marijuana as part of my workplace wellness program? That may be a question that workplace wellness program professionals ask. The answer depends on both state and federal law.

In the United States, our laws operate in a “federal” system, which means we have laws for two sets of governments – one national and one “subnational” (which in the U.S. are the “states”). See e.g., https://www.britannica.com/topic/political-system/Federal-systems. When it comes to use of certain products, such as drugs, alcohol or tobacco, one must often determine whether the use is lawful under both federal and state law.

For some products, such as tobacco and alcohol, it is generally known that both the federal and state governments permit use of those products within certain parameters, such as age and venue. For other products, such as marijuana and hemp-based products like CBD oil, the analysis is not as clear. Indeed, there is much confusion about whether marijuana or hemp-based product use is legal because federal and state law may differ. Sometimes when a federal law conflicts with a state law, the federal law wins because it “preempts” the conflicting state law. This is the case with employer health insurance (i.e., group health insurance). A federal Employee Retirement and Income Security Act of 1974 (ERISA) preempts state insurance regulation. This was because Congress wanted employers who operated across states to have to worry about only one law, and not multiple state laws.

Sometimes, however, Congress specifically says that a federal law will not preempt state laws. This was the case with the 2018 Farm Bill, which removed hemp-based products that contain less than 0.3% THC from the federal Controlled Substances Act and allowed the sale, transport or possession of hemp-derived products across state lines for commercial or other purposes. The 2018 Farm Bill did not, however, legalize marijuana. That substance is still illegal under federal law.

States vary widely on whether and how they allow consumption of hemp-based or marijuana products. For example, some states allow hemp-based products like CBD to be used in food or dietary supplements. Some states prohibit it. Other states still view CBD as a controlled substance. A number of states have legalized marijuana for medical and/or recreational use. Though it is beyond the scope of this blog post to detail each state’s current law on hemp-based products, the important point is to know that state laws differ and are constantly changing.

So, getting back to the initial question, can a workplace wellness program incentivize employees to not use otherwise lawful products that may not help that employee’s wellbeing? Assuming marijuana or hemp-based product use is not helpful for wellbeing (and there are many people and numerous studies that may place that assumption into question), workplace wellness professionals may want to discourage the use of such products as part of the program.

If the employer excludes employees from receiving certain benefits because the employee uses lawful products off premises and during nonworking hours, that could be considered discrimination under state law. For example, Wisconsin’s law under Wis. Stat. s. 111.31-35 prohibits employers from discriminating against employees for using lawful products off the employer’s premises and during nonworking hours. Discrimination includes denying the employee the same terms, conditions and privileges of employment. Wis. Stat. s. 111.322. Thus, if an employer denied an employee a benefit, such as paid time off, because he or she used tobacco, alcohol, or, if legal in the state, marijuana, when not at work, even if part of a wellness incentive program, the employer could face an allegation that the employer discriminated against the employee in violation of state law.

There are exceptions to discrimination based on the use of lawful products. In Wisconsin, as an example, employers do not violate the law if the use of lawful products does any of the following:

• Impairs the ability to undertake adequately the job-related responsibilities
• Creates a conflict of interest or an appearance of a conflict of interest with the job-related responsibilities
• Conflicts with a bona fide occupational qualification that is reasonably related to the job-related responsibilities
• Conflicts with any federal or state statute, rule, or regulation
• Violates Wisconsin Statutes Section 254.92(2) that prohibits individuals under 18 years of age from purchasing, attempting to purchase, or possessing any cigarette, nicotine product, or tobacco product.

There is another important exception involving the lawful use of products. Group health plans are allowed to vary premiums based on tobacco use because such discrimination occurs within ERISA. As noted earlier, ERISA preempts state law that tries to regulate employer health coverage. So long as the health plan is deciding the premium differential for tobacco users and nonusers, state anti-discrimination laws such as the one discussed above would be preempted by the federal law. Hence, a workplace wellness program that imposed a higher premium on tobacco users as an incentive to stop smoking would not violate state laws regarding the lawful use of products. However, such a program would have to comply with the Affordable Care Act (ACA) wellness incentive rules, which include meeting five different requirements, such as offering a reasonable alternative standard. For more information about the five factor test under the ACA, click here.

As always, if you find yourself unsure about whether you can offer incentives for abstaining from using otherwise-lawful products in your state, call the Center for Health and Wellness Law for help.

Barbara J. Zabawa

President of the Center for Health and Wellness Law, LLC
wellnesslaw.com