By Kristen Gerencher,MarketWatch

SAN FRANCISCO – It was the shot heard around U.S. company water coolers, especially for those who smoke during off hours.

An employer in the business of administering other companies’ benefits decided to eliminate smokers from its work force by randomly testing them for nicotine in their blood or urine. The zero-tolerance tobacco policy applies to smokers in general, not just those who light up on company time.

Weyco Inc., an employee-benefits administrator in Okemos, Mich., had been building up to the ultimatum for several years before four employees who opted not to take the smoking test left the company in January, founder and chief executive Howard Weyers said.

In early 2003, Weyco quit hiring tobacco users and by fall had forbidden the staff from smoking on the premises.

Starting in 2004, the firm added a tobacco “assessment” of $50 a month per worker who smoked and didn’t go to a cessation class.

15-month notice

Weyco had given its employees a 15-month advance notice that those who still smoked on or off the company’s watch by January 2005 would be terminated, Weyers said.

About 20 of Weyco’s 200 workers kicked the habit, and four quit before the company’s mandatory testing January, he said.

The justification: The desire to contain rising health-care costs and prepare people for the higher burden they face in the emerging consumer-driven health plans, Weyers said.

“We want to help our employees to handle the risk of a high-deductible plan,” he said. “They can do that by managing their health care.”

Weyco’s controversial move pits employers’ rights against those of employees and may pave the way for other private companies to invoke their own potentially discriminatory tactics in the bid to lower rapidly ballooning health-care costs, legal experts say.

What’s more, Weyco’s policy may open the door for employers to make employment more difficult to obtain for obese people or those with genetic predispositions for diseases, some warn.

“When an employer tries to deal with health-care costs by selecting or promoting employees based on their non-work-related qualifications or qualities, you’re really entering a slippery slope,” said Kary Moss, director of the American Civil Liberties Union of Michigan, which supports smoking regulations at the workplace but not those that extend beyond it.

“This isn’t an issue about smoking,” Moss said. “This is an issue about private employers being able to punish employees for their legal, non-work-related activities.”

Some Weyco workers grumbled about the policy change designed to create a healthier staff but ultimately complied, Weyers said.

Will they refuse to hire parents of children with cancer?

Weyers believes he’s doing what’s right for workers and advises other companies to demand similar changes, though he’s not extending the policy to include obesity, he said.

“I tell employers, You need to set expectations for people in the lifestyle decisions they make because they unilaterally affect the bottom line and the paychecks of other employees.’ We need to try to correct that. We’re not going to correct health-care costs unless we start dealing with the problems creating it.”

Nancy Richard-Stower, a member of the National Employment Lawyers Association and a civil-rights and employment-law attorney in Merrimack, N.H., said she doesn’t believe Weyers is acting in his workers’ best interests.

Tobacco is an easy target since it’s a serious health concern, but Weyco’s action threatens to roll back workers’ rights, Richard-Stower said.

“If we let employers make health-care costs the determining factor of whether or not you’ll be a successful applicant, we’ll be going back to the days where parents of children with cancer were not hired for fear of the costs,” she said.

“Next week it will be What’s your bad cholesterol? What’s your family health history? Genetic code?’ “

All these invasions of privacy are just over the horizon if people don’t speak out against this kind of employer snooping.”

Moss questioned the trajectory of such a policy as well. “Childbirth carries health-care risks. Sitting in the sun carries health-care risks. Lots of employees have inherited gene traits that give them a higher propensity for certain diseases. Where does this stop?”