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To explore employers’ decisions to base hiring policies on tobacco or nicotine use and community perspectives on such policies, and analyze the implications for organizational identity, community engagement, and health promotion.From 2013 to 2016, 11 executives from six health care organizations and one non-health-care organization with nonsmoker-only hiring policies were interviewed about why and how their policies were created and implemented, concerns about the policies, and perceptions of employee and public reactions. Focus groups were conducted with community members (n = 51) who lived in or near cities where participating employers were based, exploring participants’ opinions about why an employer would stop hiring smokers and their support (or not) for such a policy.Most employers excluded from employment those using all forms of nicotine. Several explained their adoption of the policy as a natural extension of a smoke-free campus and as consistent with their identity as health care organizations. They regarded the policy as promoting health. No employer mentioned engaging in a community dialogue before adopting the policy or reported efforts to track the policy’s impact on rejected applicants. Community members understood the cost-saving appeal of such policies, but most opposed them. They made few exceptions for health care organizations.Policy decisions undertaken by health care organizations have influence beyond their immediate setting and may establish precedents that others follow. Nonsmoker-only hiring policies may fit with a health care organization’s institutional identity but may not be congruent with community values or promote public health.