When Business Should Mind Its Own Business

"In a five o'clock world, when the whistle blows, no one owns a piece of my time," avers the refrain of a '60s song. But these days, some employers want to tell you what you can do with your time off the job.

Employers have always been interested in employees' off-duty activities to some degree: In the days of the company town, it was common for corporate officials to police their workers' behavior. The meddling of today, however, is motivated not so much by morals as by medical costs. In the past three years, corporate insurance plan premiums have risen an average of 17% annually--and employees who engage in unhealthy habits file more claims. Smoking can be hazardous to the company's fiscal health. So some companies are refusing to employ what they deem high-risk types. Many more are introducing disincentives--say, charging these workers extra for their health plan coverage.

Drawing the line between off-hours behavior and on-the-job performance isn't easy. An all-night carousal clearly affects an employee's ability to perform at work the next day. But once you start regulating behavior, where do you stop? What about people who eat lots of greasy foods? Or someone with a family history of heart disease?

And while the share-the-higher-costs argument seems logical, there's little evidence that it really saves money. Companies should, by all means, encourage employees to lead healthier lives. But performance should be the sole criterion for holding a job. Lifestyle discrimination could put companies on a course far more perilous than could tolerating a work force full of smokers and drinkers.

Before it's here, it's on the Bloomberg Terminal.