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The decision last week by a Chicago-based company to require its plant employees to quit smoking in and out of the workplace or lose their jobs raises a specter more frightening than Big Brother.

As loathsome as it may be for government to try to intrude into the personal habits of its citizens, there are at least constitutional checks to stop it or limit how far it may go.

But surprising as it may seem, no such authority prevents a private company from attempting to regulate the personal lives of its workers. Without a labor union or a private employment contract, a company employs its workers ”at will” and may treat them pretty much as it pleases.

Nevertheless, the action by USG Acoustical Products Co. in attempting to stop its employees from engaging in a legal–albeit hazardous–activity is unprecedented. It surprised and shocked even some management groups.

It raises fundamental questions about the moral obligations a company owes to the privacy of its workers, counterbalanced by similar obligations to insure their safety in the workplace.

But it also may raise disturbing questions about the company`s motivation and how far a corpora-tion might reach into private affairs to ensure against financially harmful litigation.

An increasing number of companies are restricting or banning smoking in workplaces, and some have announced policies not to hire smokers, but none is known to have gone as far as USG.

USG Acoustical Products, which manufactures soundproof tiles, says its antismoking policy is motivated out of concern for the health of its employees, but some outsiders suggest it might be a protective measure to shield USG from potential lawsuits by plant workers handling fibers that might lead to lung disease or cancer.

Some lawyers outside the company note that its parent, USG Corp., formerly U.S. Gypsum, has been a defendant in many of the approximately 40,000 lawsuits nationwide brought by installers of asbestos materials who have contracted lung disease or cancer from the fiber.

The company also is a primary defendant in more than 100 suits brought by school districts and other entities trying to rid their buildings of asbestos insulation.

”It sounds like a defensive posture,” said Charles Patrick, a lawyer with a Charleston, S.C., law firm that represents plaintiffs in some 10,000 of the pending asbestos lawsuits. ”It seems to me that they are trying to protect themselves from some type of future lawsuit, possibly trying to lay the groundwork to blame future lung disease of its workers on cigarette smoking rather than on potentially hazardous

fibers in the plants.”

A USG spokesman, acknowledging the company`s involvement as a defendant in the asbestos litigation, said such a view is ”obviously somebody else`s opinion.”

The company announced its policy in a letter to employees. The letter referred to disclosures at a World Health Organization meeting last October where researchers warned of possible dangers over a long period of years in handling certain man-made and mineral fibers.

Workers at the company`s nine plants use a mineral-based fiber–a steel byproduct–to manufacture thermal insulation and acoustical tiles.

The letter said: ”. . . Recent research indicates a small increase in the risk of lung disease in people employed in man-made mineral fiber manufacuturing operations 30 or more years ago. The cause is unclear.”

The letter also noted that smoking paralyzes and eventually kills microscopic hairs, called cilia, which serve to filter contaminants from the lungs.

”Unfortunately, most studies show that smoking causes cancer,” the letter went on to say. ”It appears that the amount of dust in our plants does not create an excess risk of lung disease. However, common sense tells you that the combination of smoking and dust is not good. Therefore, we feel that this program is essential.”

The company then outlined steps ”to maintain our plants as the safest in the industry.”

These steps included providing and laundering uniforms for all production and maintenance employees; providing face masks for employees; an end to hiring persons who smoke; instituting a program paid by the company to help current employees quit smoking; and administering an annual pulmonary function examination to employees each year.

The letter said nothing about firing employees who continue to smoke, but company spokesman Paul D. Colitti said employees were warned in face-to-face meetings.

”Under the new policy, if an employe smokes off the job, as well as on the job, or if they`re smoking in a bar on Saturday night with friends, they might put their job in jeopardy,” Colitti said.

”There is no question that it covers their entire lifestyle. This is not a no-smoking-while-you`re-at-the-plant policy. This is a step beyond that,”

he said.

Initial reaction from the workers was muted. They don`t belong to any labor union. When reporters from two newspapers attempted to talk with workers at a plant in Corsicana, Tex., the employees said they were instructed by the company not to talk about the policy and that they would comply because they feared for their jobs.

Colitti said, however, employee reaction has been ”pretty favorable.”

Others expressed grave concerns.

Murry Seeger, a spokesman for the AFL-CIO in Washington, noted an increasing pattern of companies trying to force additional work rules–”in some cases, even morality”–on workers, and that the USG policy opens the door to ”frightening possibilities.”

”The thing we find outrageous, of course, is this increasing attempt to control private behavior outside the workplace–whether it is illegal activity, such as possession of drugs. And now even legal behavior is targeted,” said Jay Miller, director of the Chicago chapter of the American Civil Liberties Union.

The no-smoking rule does not apply to workers at its corporate headquarters in Chicago, only to the 1,300 plant workers. If the health of employees were the sole concern, the ban would be companywide, critics say.

Furthermore, they note, if USG were really concerned about workers`

health, the policy also could have covered alcohol and drug abuse.

Colitti said the company`s concern is the danger from fiber inhalation compounded by smoking, and that employees at the Chicago headquarters are not exposed to fiber. Colitti said that if further studies indicated that other substances, such as alcohol or drugs, ever are shown to aggravate the danger of being exposed to fiber, the company would consider acting against those, too.

Critics also note the involvement of U.S. Gypsum Co., a subsidiary of USG Corp., as a defendant in the asbestos litigation, where manufacturers of asbestos and related products are accused of withholding evidence about the dangers of the fiber from workers for many years.

”If this same proposal were made by the asbestos industry 30 or 40 years ago when we allege it knew about the dangers, many of these companies wouldn`t be defendants today,” said Terrence Johnson, a Chicago lawyer who has some 400 cases pending against the asbestos manufacturers.

For example, USG`s decision to provide plant workers with uniforms and laundry service may stem from lessons learned in the asbestos litigation, Johnson says. He said a number of wives of asbestos installers have sued the asbestos manufacturers after contracting lung disease or cancer, claiming their illness was due to the frequent laundering of their husbands`

workclothes, which were covered with dust from the fibers.

Johnson also notes that a frequent defense by manufacturers in the asbestos litigation is that cigarette smoking caused the lung disease or cancer in the worker, and that USG may be laying the groundwork for such a defense in the event of future lawsuits by workers in the plants.

Despite the concern voiced by others about the intrusion into private lifestyles, Edith Weiner, president of a New York management consulting firm, says USG`s policy appears to be a very wise business decision and she is guessing that stockholders would applaud the company`s decision.

”I think you will find more and more people saying, `screw individual rights. If public safety is at stake, test the airline pilots for drugs,`

” she said.

”If you agree with that, isn`t it OK for a company to institute a policy like this if it knows the immediate costs in terms of its health insurance are high and the long-term costs in terms of its liability could be high?”

Noting that Manville Corp., a major defendant in the asbestos litigation, has declared bankruptcy, Weiner says the decision by USG should be not be regarded as ”a paternal demand made of its workforce” but ”a matter of economic survival.

”I think the bulk of everything that`s going on today is on management`s side on this issue,” she said. ”It`s not a cut-and-dried individual rights issue.”

Still, she said, ”There is a fear of the domino effect. If you allow this, where does it end?”

There are obvious concerns that a company that dictates whether employees may smoke in their own homes also may believe it can dictate whether employees drink, what they can wear, what church they go to and for whom they vote.

Beyond that, the mandatory lung-testing policy could provide USG management with a pretense to fire unwanted employees.

Colitti said the decision to terminate employees who fail to quit smoking would be made on ”a case-by-case basis.”

Although the Tobacco Institute says it is studying whether to legally challenge the ban, lawyers who work in the management and labor union field, as well as as other experts. say there is no clear legal path to win reversal of the policy.

Some legal experts suggested that an employee may challenge the policy under laws in some states that prohibit discrimnation against the handicapped. In some states, drug addicition is considered a handicap, suggesting an addicited smoker may be considered handicapped as well.

Miller suggested that the only sure remefy is passing state or federal laws to prohibit such activity.