Workers' Compensation: Casino Workers Fight Smoke Exemption

New Jersey Appeals Court Revives Constitutional Challenge to Workplace Smoking

A New Jersey appeals court has breathed new life into a lawsuit that could fundamentally change workplace safety protections for thousands of casino workers—and potentially reshape how workers' compensation claims are handled for smoking-related illnesses.

The Case at a Glance

On January 26, 2026, the New Jersey Appellate Division issued a significant ruling in UAW v. Governor Murphy, partially vacating a trial court's dismissal of a constitutional challenge to New Jersey's casino smoking exemption. The case, brought by the UAW and CEASE NJ (Casino Employees Against Smoking's Effects) on behalf of approximately 6,000 casino workers, argues that exempting casinos from the state's Smoke-Free Air Act violates workers' constitutional rights to equal protection and workplace safety.

The Court's rationale for reversal of the lower court: "We do so because the trial court, after discerning no fundamental right is at stake, applied a mistaken 'rational basis' approach to plaintiffs' state equal protection challenge without conducting a fulsome balancing of the competing interests under the three-factor test prescribed by our State Supreme Court."

Why This Matters for Workers' Compensation

This case has profound implications for workers' compensation in several ways:

1. Workplace Safety Inequality

The New Jersey Smoke-Free Air Act, enacted in 2006, prohibits smoking in virtually all indoor workplaces—except casinos and a handful of other venues. This creates a two-tiered system where casino workers face documented health hazards that employees in restaurants, offices, hospitals, and other workplaces do not.

The court acknowledged that "irreparable harm may result" from continued exposure to secondhand smoke, noting that research shows such exposure "may lead to lung cancer and premature death." This recognition of irreparable harm is critical for future workers' compensation claims.

2. Documented Health Hazards

The court's opinion extensively reviewed the medical evidence:

Federal health authorities have recognized the causal link between secondhand smoke and disease for decades
The 1986 Surgeon General Report confirmed that "disease risk due to the inhalation of tobacco smoke...can extend to those who inhale tobacco smoke emitted into the air."
The Smoke-Free Air Act itself contains legislative findings that "tobacco smoke constitutes a substantial health hazard."

This official recognition strengthens the evidentiary foundation for workers' compensation claims by casino employees who develop smoking-related illnesses.

3. Increased Claims Exposure

If casino workers continue to be exposed to secondhand smoke, insurers and employers may face:

Higher rates of respiratory illness claims
Lung cancer claims linked to workplace exposure
Cardiovascular disease claims
Increased premium costs to reflect these elevated risks

The court noted that "thousands of casino workers" are affected, making this a significant exposure issue for the industry.

4. Economic Arguments vs. Worker Safety

The case highlights a fundamental tension in workers' compensation: balancing economic interests against worker health. The casino industry presented the "Spectrum Study," claiming that a smoking ban would cause:

Revenue losses between $23.1 million and $113.8 million
Job losses between 1,021 and 2,512 positions
Tax revenue reductions between $17.2 million and $44.6 million

However, workers presented a competing "C3 Study" showing that "banning smoking no longer causes a dramatic drop in gaming revenue" and that many smoke-free casinos have been commercially successful.

The appeals court found the trial court erred by accepting the industry's economic claims "at face value" without proper scrutiny.

The Court's Remand: What Happens Next

The Appellate Division's decision is particularly significant because it:
Affirmed the denial of a preliminary injunction (temporary relief)
Vacated the dismissal of the case and denial of a permanent injunction
Remanded for further proceedings, specifically requiring:

Discovery into the disputed economic claims
Potential evidentiary hearings
Proper application of New Jersey's three-factor equal protection test

The court emphasized this is "an exceptional case with exceptional stakes" affecting thousands of workers and millions in tax revenue.

The Constitutional Framework

While the court declined to recognize a standalone "fundamental right to safety" under the New Jersey Constitution, it found the trial court made a critical error in applying federal "rational basis" analysis instead of New Jersey's distinct three-part balancing test for equal protection:

The nature of the affected right - Workers have "a strong interest in equality of treatment" regarding workplace safety
The extent of the intrusion - Casino workers face documented health hazards that other workers don't
The public need for the restriction - Must be proven, not assumed

The court noted that under New Jersey law, "a right need not be labeled 'fundamental'...to trigger searching judicial review."

Implications for Workers' Compensation Practice

For Injured Workers:

The case strengthens the argument that workplace secondhand smoke exposure is a recognized occupational hazard
Medical causation for smoking-related illnesses may be easier to establish, given the court's acknowledgment of documented health effects
The "irreparable harm" finding supports the severity of these health impacts

For Employers and Insurers:

Continued exposure creates ongoing liability for future claims
The case may increase pressure to voluntarily ban smoking to reduce claims exposure
Premium calculations may need to account for elevated risk in smoking-permitted venues

For Claims Adjusters:

Stronger evidentiary foundation for accepting causation on secondhand smoke claims
Need to carefully evaluate exposure duration and intensity for casino workers
Medical opinions may carry more weight, given the court's recognition of established science

For Defense Attorneys:

Challenging causation becomes more difficult given judicial recognition of health hazards
Economic arguments about business impacts may not override worker safety concerns
Comparative negligence arguments (the worker chose to work there) may face skepticism

Historical Context

New Jersey has a long history of expanding smoking restrictions:

1981: First laws limiting smoking in specific locations
1985: The casino exemption was first created
2006: Comprehensive Smoke-Free Air Act with casino exemption
2020-2021: COVID-19 temporary casino smoking ban
2006-present: Every legislative session has seen bills to eliminate the casino exemption (none enacted)

The exemption has persisted despite repeated legislative attempts to eliminate it, making this constitutional challenge potentially more impactful than the legislative route.

What the Studies Show

The competing economic studies present starkly different predictions:

Industry-Funded Spectrum Study (2021):

Smokers are over-represented among casino patrons (21% vs. 13% general population)
Smoking sections generate higher revenue per machine
Projected 4.2%-10.9% revenue loss from the smoking ban

C3 Gaming Consultants Study (2022):

Post-COVID data shows many smoke-free casinos have thrived
Cost savings from reduced HVAC maintenance and equipment damage
The primary reason for casino choice is proximity (32%), not smoking policy
Only 4% cite smoking availability as the primary factor

The trial court accepted the industry study without scrutiny; the appeals court found this was an error and requires a full evaluation of both studies' reliability.

Broader Worker Safety Implications

While this case specifically addresses casino workers, the principles could extend to other workers' compensation contexts:

Can economic arguments justify exempting any industry from general workplace safety laws?
How should courts balance business interests against documented health hazards?
Does the state constitution require equal workplace protections across all industries?

The court's emphasis on workplace safety as a significant interest under state equal protection principles could influence future challenges to industry-specific exemptions from safety regulations.

Key Takeaways for WC Professionals

Document Exposure: Casino workers should carefully document the duration, frequency, and intensity of secondhand smoke exposure
Medical Evidence: The court's recognition of established medical science regarding secondhand smoke strengthens causation arguments
Comparative Analysis: Consider exposure levels compared to pre-2006 smoking levels in other workplaces
Legislative Findings: The Smoke-Free Air Act's own findings about health hazards can support workers' compensation claims
Anticipate Change: Even if the constitutional challenge ultimately fails, the case may spur legislative action or voluntary employer policies
Reserve Implications: Insurers should consider the potential for increased claims if exposure continues or if retroactive claims arise after any ban

The Road Ahead

The case now returns to the trial court for:

Discovery of the competing economic studies
Possible evidentiary hearings
Proper application of the three-factor equal protection balancing test
Findings on whether the economic justifications for the exemption are valid

This process could take months or years, and any final decision will likely be appealed to the New Jersey Supreme Court again.

Conclusion

The UAW v. Murphy decision marks a significant development in the intersection of constitutional law, workplace safety, and workers' compensation. By rejecting the trial court's deferential approach and demanding rigorous scrutiny of the casino industry's economic claims, the appeals court has signaled that worker health and safety cannot be casually sacrificed to business interests—even when significant tax revenues are at stake.

For the thousands of casino workers who face daily exposure to secondhand smoke, and for the workers' compensation system that will handle their future claims, this case represents a potential turning point. Whether through constitutional invalidation of the exemption or legislative response to the litigation, change appears increasingly likely.

Workers' compensation professionals should closely monitor this case, as its outcome will affect claim handling, reserve setting, and risk assessment for one of New Jersey's largest industries. More broadly, the case raises fundamental questions about how we value worker health and safety in our legal system—questions that resonate far beyond the casino floor.

Case Citation: UAW, Region 9 of the UAW, and C.E.A.S.E. N.J. v. New Jersey Governor Philip Murphy, et al., Docket No. A-0057-24 (N.J. App. Div. Jan. 26, 2026)

Status: Remanded to the trial court for further proceedings

Next Steps: Case management conference within 30 days; discovery; possible evidentiary hearing; renewed constitutional analysis.

*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).

Blog: Workers' Compensation

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" West-Thomson-Reuters

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