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Companies Get Tougher with Employees Who Smoke

As laws pinch firms with unhealthy workers, bosses get tough

Many companies use quiet incentives to encourage desired employee behavior, such as losing weight. Not Macy’s. Beginning on July 1, workers at the department store chain who admit to using tobacco will be surcharged $35 a month, or $420 a year, for health coverage. The extra cost will be deferred only if smokers enroll in a free quit-smoking class. Their progress will then be reviewed after six months.

Instead of using carrots to encourage smokers to kick the habit, businesses increasingly are wielding sticks. At PepsiCo, smokers pay an annual $600 insurance surcharge, while publisher Gannett charges $60 a month. Some go even further: Union Pacific and Scotts Miracle-Gro refuse to hire smokers.