Indiana Legislature Prohibits Penalties for Jury Service, Allows Incentives for Smoking Cessation

The 2006 Indiana General Assembly passed approximately 190 bills during the legislative session ending in March. Of these, two are likely to have a significant impact on Indiana employers. The first bill tightens an existing restriction on employers, the second appears to loosen one.

I.C. 33-28-4-8.3 –Jury Duty

Tucked away in a Title of the Indiana Code dealing with courts and court officers, an amendment to the provisions governing jury service is likely to change some Indiana employers' policies regarding leave, pay, and other terms of employment as they pertain to employees called for jury duty. The new Section 8.3 prohibits employers from taking "any adverse employment action as the result of [an employee]'s jury service." Specifically, employees may not be required (or requested) to use annual vacation or sick leave for time spent responding to a summons for jury service, participating in the jury selection process, or serving on a jury. The amendment is careful to state, however, that employers need not provide annual vacation or sick leave to an employee who is not otherwise entitled to these benefits. In other words, an employee who has exhausted his or her benefits does not get more because they have been called for jury duty.

Section 8.3 is somewhat curious in that Indiana already has laws creating both civil and criminal causes of action against employers who interfere with jury service, such as by denying employment benefit. Presumably, the new amendment is meant to clarify that requiring or requesting employees to use up vacation or sick days falls within the ambit of these existing prohibitions, as the amendment does not provide any new remedy or enforcement mechanism. The bottom line is that employers will need to take another look at their jury duty policies.

I.C. 22-5-4-1 – The "Smokers' Bill of Rights"

For over ten years, Indiana law has prohibited an employer from requiring an employee or prospective employee to refrain from using tobacco products outside of work. Similarly, employers cannot discriminate against an employee with respect to compensation, benefits, terms, or conditions of employment based on off-duty tobacco use. These prohibitions are backed by the threat of a civil lawsuit as well as costs and attorney fees provisions for successful claimants. However, the 2006 amendments to I.C. 22-5-4-1 allow employers to "implement financial incentives (1) intended to reduce tobacco use and (2) related to employee health benefits provided by the employer."

Governor Daniels was a key proponent of the amendment, recognizable as part of a broader societal push to create incentives for smoking cessation generally and, specifically, to encourage lower insurance rates for non-smokers. It appears that the bill was originally intended to apply specifically to group health plans, though the language as enacted is open to possible broader interpretation. For instance, offering employees $100 for the successful completion of a smoking cessation course is clearly a financial incentive and is arguably related to employee health benefits. For that matter, the offer itself may be an "employee health benefit," as that term is not further defined in the Indiana Code. Whether such an offer is permissible is not clear from the current language.

Further lacking definition is the distinction between incentives that do not discriminate and those that do. For example, an employee may argue that, because of his nicotine addiction, he cannot possibly obtain the benefit at issue and, therefore, it constitutes discrimination in the terms and conditions of his employment. Similarly, imposing a higher cost for participation in benefit plans unquestionably serves as an incentive to avoid that cost, but it also simultaneously imposes a penalty that could be classified as discrimination against those for whom the incentive is not sufficiently compelling. Since Indiana has no legislative history that could shed further light on this distinction, it will be up to the courts to interpret exactly what is and is not permissible.

Another question surrounding the new amendment is the extent to which certain aspects of it may be preempted by ERISA, the federal law that governs most employer-sponsored health and other employee benefit programs. ERISA broadly preempts most state laws seeking to regulate employee benefit plans, particularly with respect to self-funded health plans. In addition, the HIPAA amendments to ERISA prohibit group health plans from discriminating or making premium distinctions on the basis of certain "health status-related factors." This raises a further complication with respect to any changes an employer might consider for its ERISA-covered health plan with respect to smoking issues (such as a premium reduction for non-smokers).  HIPAA permits group health plans to offer premium discounts and rebates, and to modify otherwise applicable co-payments or deductibles, in return for adherence to programs of health promotion and disease prevention, also known as "bona fide wellness programs." U.S. Department of Labor ("DOL") regulations, currently in proposed form, indicate that certain health programs aimed at encouraging smoking cessation may be required to comply with the bona fide wellness program regulatory requirements. These requirements may, in effect, supplant conflicting or less restrictive state laws, such as Indiana's recent amendment, in certain circumstances.

The one certainty surrounding the amendment to Indiana's smokers' rights statute is that it entails a great deal of uncertainty. For the time being, employers wishing to take what advantage there is to be had of the amendment should work closely with counsel to draft incentives that meet the DOL's proposed wellness program guidelines and avoid instituting any programs that resemble a punishment more than a reward.