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pe.cial Report: Wisconsin Manufacturers & Commerce, 501 E. Washington Avenue, P.O. Box 352, Madison, WI 5370"1-0352, (608) 258-3400 EI~PLOYEE USE OF LA~L FRODUC'I~ FROrI~r~D UNDER NEW LAW Wisconsin Governor Tommy Thompson recently, signed legislation prohibiting employment discrimination based upon an employee's use or non-use of lawful products off the employer's premises during non-working hours. This Special Report summarizes the basic components .of this legislation and identifies aspects of the new law that may require employers' special' attention. 1991 Wisconsin Act 310 (the "Act") amends the Wisconsin Fair Employment Act (§ 111.31, Wis. Stats.), and applies to any person "engaging in any activity, enterprise or business employing at least one individual." The Act does not cover certain social dubs or fraternal societies with respect to jobs that such dubs or societies seek to fill with their own members, provided the job in question is advertised only within the membership. 2. Protected Activity. It constitutes unlawful discrimination in employment to take any prohibited action against an employee or prospective employee on the bases of such a person's use or non-use of lawful products off the employer's premises during non-working hours. 3. to the Pm ition_ a. Non-profit corporations. The act provides that it does not constitute discrimination for a nonprofit corporation to consider an employee's use of a lawful product in employment decisions, ff the corporation discourages the general public from using the product as one of its primary purposes or objectives. Similarly, it is not employment discrimination for a non-profit corporation to consider an employee's failure to use a lawful product, ff that corporation encourages the general public to use the product as one of its primary purposes or objectives. This Special Report Was Prepared In Cooperation With: GODFREY & KAHN, S.C. Madison Office, Milwaukee Office, Oshkosh Office, Sheboygan Office, Green Bay Office, (608) 251-4670 (414) 273-3500 (414) 233-6050 (414) 457-2022 (414) 432-9300 TI28781357

b. Exceptions for covered employers. It is not employment discrimination for an employer to consider employees' use or non-use of a lawful product if use or non-use of the product does any of the following: (1) .Impairs employees' ability to adequately responsibilities. undertake their job-related (2) Creates a conflict of interest, or the appearance of a conflict of interest, with employees' job-related abilities. (3) Conflicts with a bona fide occupational qualification that is reasonably related to employees' job-related responsibilities. (4) Constitutes a violation of §48.983(2), Wis. Stats., which concerns the use of tobacco products by children. (5) Conflicts with any federal or state statute, rule, or regulation. c. Insurance. It does not constitute discrimination for employers to distinguish between employees who use a lawful product and those who do not use that product for purposes of determining the type or price of coverage for life, health, or disability insurance offered to employees, provided that: (1) The difference in premiums charged reflects the difference in the cost of providing the coverage to employees who do and do not use the lawful product. (2) Employees are given a written statement specifying the "premium rate differential used by the insurance carrier." 4. Principal Limitations. The language of the Act is somewhat general and, in certain areas, unusually broad. Further, certain concepts used in the Act are not defined in the Act itself. As a result, employers may need to exercise caution in attempting to comply with the following provisions of the Act. a. Prohibited discrimination. Purp08e of lawful products u~e. The Act specifies that use of a lawful product in an illegal manner is not protected by the Act. However, the Act is considerably less clear on whether use of lawful products in a manner for which the product is not generally intended or as part of a more general, undesirable conduct is protected. Therefore, employers need to exercise care in distinguishing use of lawful products from more general patterns of conduct which are. inconsistent with company expectations for employees. (2) Scope of the prohibition. The Act refers to use or non-use of lawful products generally and does not specify particular products which fall within its protection. Consequently, while the Act was originally touted as a "smokers' rights" bill, a wide variety of behavior which coincidentally involves the use of products not prohibited by law may trigger the Act. This may, among other things, sharpen the need for employers to regularly evaluate employee performance in order to respond to claims that use or non-nse of lawful products influenced employment decisions. T!28781358

(3) Liabili .t-y Exposure. All employees use or decline to use certain lawful products. Thus, because the Act treats use and non-use of lawful products as a discrimination issue under fair employment statutes, the class of individuals who can claim protection under the Act is virtually unlimited. Accordingly, the Act reinforces the premimrt already placed on workplace documentation of employment decisions. Similarly, employers need to take deliberate steps to advise management and supervisory personnel that seemingly innocuous remarks concerning employees' use or non-use of lawful products may carry a heavy price if adverse action is taken against such an employee at a later time. Non-profit corporations. It is not clear when the exemptions for non-profit corporations under the Act apply. The Act states that such a corporation may consider an employee's use or non-use of a lawful product if the corporation discourages the general public from using the product or encourages the general public to use the product or encourages the general public to use the product as one of its "primary purposes or objectives." However, it is not clear to what extent this defense is available to non-profit corporations having diverse public purposes under the "primary purpose or objective" standard. Conflicts of interest. The most basic concern employers may have with the Act's conflict of interest provisions is that the Act does not define its terms. Consequently, the Act provides little guidance as to what use or non-use of products will be viewed as incompatible with an employee's job duties. The conflicts provisions do indicate that any conflict, appearance of conflict, or conflict with a BFOQ (bona fide occupational qualification) must bear a relationship to employees' job-related responsibilities. Thus, like the Americans with Disabilities Act, these provisions reinforce the need for employers to formulate detailed job descriptions and analyses to more precisely and exhaustively identify particular employees' job-related responsibilities. Insurance provisions. The Act indicates that employers can distinguish between employees who use particular products and those who do not in the type or price of coverage provided to employees. However, the difference in rates charged must reflect the cost of coverage and a written statement must be provided to employees specifying the premium rate differential used by the insurance carrier. These provisions may present the following practical difficulties for employers: (l) Distinguishing between employees on the basis of their nse/non-use of lawful products for purposes of the type of insurance coverage offered is permitted. However, this exception is not referenced in related portions of the Act which describe conditions an employer must meet to justify distinguishing between employees in the price of their insurance benefits. Thus, it is not clear whether an employer must take similar steps to justify distinguishing between employees for purposes the type of coverage offered. (2) The Act requires employers to specify the "premium rate differential used by the insurance carrier" as a condition of meeting this exception. However, an insurance carrier may have difficulty isolating the effect that use or non-use of a particular product has on overall insurance rates. Also, it is not clear to what extent this provision relates to employee welfare plans established by employers, since the Act seems to assume that an employer will provide health care benefits through an insurance carrier. (3) The insurance exceptions under the Act involve accounting for the off-duty conduct of employees. In order to meet the Act's requirements for relying upon these provisions, employers must first be certain that the employee engages in the off-duty use of certain products or refrains from off-duty use of certain products. TI28781359

This provision, therefore, may have the unusual and unintended effect of requiring employers to document or monitor the off-duty conduct of their employees in order to appropriately assign premium costs or make coverage determinations under the Act. The lawful products Act reinforces the need for employers to take steps already prompted by other statutes and raises unique personnel problems. At the very least, job descriptions and employee benefits packages must be revisited, and supervisors need to be schooled on the kinds of statements that may run afoul of the Act's proscriptions. This special report is intended to provide general information about legislative and other legal developments. Information contained herein shouM not be construed as legal advice or opinion. Readers should seek legal counsel concerning specific situations. 1992 Godfrey & Kahn, S.C. All rights reserved. TI28781360