Until the late 1970s, it was a widely accepted practice. Companies, especially within the airline industry, would deny employment to those who were fat, unattractive, handicapped or a member of almost any ethnic minority. But over time, otherwise qualified candidates began to fight back, often taking legal action. By the early 1980s, it wasn't just immoral for companies to discriminate against someone because of race, gender or weight, it was illegal.

But as health care costs have skyrocketed out of control, companies have again begun pushing the envelope on what courts consider appropriate–or even legal–hiring criteria. This time around, activities such as smoking and overeating are factoring into the equation. And anyone with the potential to develop an illness, such as carpal tunnel syndrome or cancer, that will increase a company's health care costs in the future may also fall victim to discriminatory practices.

In the past few years, the EEOC has filed numerous suits on behalf of potential employees, claiming discrimination under the Americans with Disabilities Act (ADA). But so far, the commission hasn't done so well in court.

“If you are not discriminating against someone on the basis of a disability, the ADA says it's permissible to exclude those potential employees as long as the reason isn't disability based,” says Chris Kuczynski, assistant legal counsel for the EEOC's ADA Policy Division.

And therein lies the problem. Many experts believe the definition of disability under the ADA is too narrow, providing little or no protection for job applicants who believe they've been discriminated against on the basis of weight, smoking habits or the possibility of developing a future illness.

On Dec. 1, 2004, the National Council on Disability (NCD), an independent federal agency set up to enhance the quality of life for disabled Americans, issued a report titled “Righting the ADA,” which calls for the passage of the ADA Restoration Act of 2004. If enacted, it would expand the definition of “disability” under the ADA to include a wider range of possible impairments, as well as reverse many recent Supreme Court rulings in ADA cases, including the EEOC's.

Meanwhile plaintiffs' attorneys and the EEOC are looking to state law for relief. And some companies–in the interest of sidestepping potential lawsuits–are using other means, such as incentive programs, to curb health care costs.

Disability 101

According to the ADA, a person is considered disabled if he or she has a physical or mental impairment that substantially limits one or more major life activities, has a history of such an impairment or is “regarded as” having such an impairment.

“The ADA's definition of disability basically covers people who have an actual immediate impairment, it protects people who don't have one now but had one in the past, and it protects against the notion that a person's impairment would be substantially limiting,” says Frank Alvarez, a partner at Jackson Lewis in White Plains, N.Y. “However, it doesn't necessarily cover people who have present abilities to perform jobs but may become unhealthy in the future.”

Right now, that's not good news for people susceptible to serious future illnesses. In two separate cases in 2001–EEOC v. Rockwell International and EEOC v. Woodbridge Corp.–the commission fought on behalf of applicants who were rejected for positions based upon pre-employment laser testing, which revealed they were more likely than the average person to develop carpal tunnel syndrome.

Because the potential employees in both cases actually had the ability to work and didn't have a history of the disorder, the EEOC had to use the ADA's “regarded as” theory of disability discrimination to claim the Act protected the applicants. In both cases, appeals courts ruled that the EEOC had failed to establish that these individuals were within the class of people the ADA intended to protect. The commission ultimately lost both suits.

“The court never got to evaluate the practice itself because the class of individuals was outside the protection of the law,” Alvarez says. “This will continue to happen in these cases unless the legislation proposed by the NCD is passed.”

In the wake of several court decisions the NCD believes have negatively impacted the disabled, the proposed law attempts to “reinstate the scope of the protection of the ADA, restore certain previously available remedies to successful ADA claimants and curtail certain inappropriate and harmful defenses that have been grafted on to the carefully crafted standards of the ADA.”

Congress is currently reviewing the proposed legislation and is expected to make a decision sometime this year, Alvarez says. “Until then, individuals have to look to state law to offer protection.”

States Draw The Line

State laws generally define disability much more broadly than the ADA. Currently 29 states have enacted lifestyle-discrimination laws that prohibit employers from refusing to hire workers for their legal behaviors outside of work hours. For example, under New York's Recreational Activities Law, companies cannot discriminate against smokers because smoking is a lawful activity.

“Any reasonably national employer that would want to impose a ban on hiring smokers in every state would have to do a state-specific search as to whether such a policy would be permissible,” says Frank Morris, partner at Epstein Becker & Green in Washington, D.C. “At the state level, you are going to have to look closely at what the state law theories may be.”

Washington, D.C., and North Carolina have followed New York's lead. Other states, however, haven't seemed as concerned.

Washington, for example, has no lifestyle-discrimination laws, and companies are free to implement whatever policies they like. For example, Schweitzer Laboratories in Pullman, Wash., refuses to hire smokers and, according to its Web site, will fire anyone who starts smoking after they begin working for the company. Alaska Airlines even requires applicants to pass a nicotine test.

But experts believe employers may be on fairly safe ground when refusing to hire smokers.

“I am not aware of any court saying smoking or addiction to tobacco is a disability,” Kuczynski says. “If you exclude someone because they are a smoker, you are probably not excluding them because of a disability.”

It may not be that simple if a company wants to refuse to hire obese people, health care costs for whom total between $69 billion and $117 billion per year, according to the U.S. Department of Health and Human Services.

The EEOC has never brought a suit against a company that has admitted to rejecting a candidate because his or her obesity would raise health care costs, but Gary Phelan believes companies may be using other excuses not to hire the obese, such as their inability to move quickly in an emergency or claiming the applicant simply wasn't qualified.

“It's not like the employers come out and say the reason they refused to hire someone was because their obesity would raise health care costs,” says Phelan, a partner in the Stamford, Conn., office of Outten & Golden, which represents plaintiffs in labor and employment claims. “It's difficult to prove.”

Furthermore, overweight people (like smokers) aren't covered under civil rights laws, which protect employees on the basis of religion, race, gender or disabilities. And unless they are morbidly obese–or twice their optimal body weight–they are not protected under the ADA either.

But some companies are seeking means other than denying employment to smokers and the obese in an effort to decrease health care costs.

Motivating Employees

In the past several years, companies such as Union Pacific, Motorola, Pfizer, DaimlerChrysler and Caterpillar have all set in place programs to offer employees incentives to lead healthy lifestyles.

Motorola, for example, offered its employees educational programs on healthy living, flu immunizations, aerobics and nutrition classes, as well as a toll-free line that offers medical advice. The effort has paid off. Motorola estimates it saves $6.5 million annually in medical expenses for lifestyle-related diagnoses. Other companies offering similar programs also have reported positive results.

Although incentive programs are usually a safe approach to reducing health care expenditures, experts warn that companies still need to be careful.

“When there is an employee who has a disability that, for whatever reason, can't get the benefit, it is the company's responsibility to make some kind of modification to the program so the individual with the disability may obtain the benefit through some other means,” Kuczynski says.

For example, if an employer offered incentives for walking a mile three times a week–a task a wheelchair-bound employee would be unable to accomplish–the company must offer an alternative activity so the employee could participate.

Overall, experts believe implementing incentive programs is the best way a company can go about getting its health care costs down–and a much safer way than merely excluding certain people.

“Under the ADA, however, a company can't use concerns about potential health care costs as a screening mechanism,” says Phelan. “The whole focus of the ADA, and employment law in general, is to make hiring and promotion decisions based on abilities, not perceptions and stereotypes.”

Alvarez agrees, and says this issue is a ticking time bomb about to explode.

“The expansion of the definition of disability by state laws suggests to me that there is going to be a movement to address this type of conduct from a public policy standpoint,” he says. “And in the interim, because these practices tend to screen out people that have the present ability to do jobs, it creates legal risks. That inherent notion of unfairness will fuel not only outrage, but litigation as well.

“This is something that is going to drive public debate among workplace lawyers in the years to come,” he adds.