At the beginning of 2002, New York City Mayor Michael Bloomberg passed some of the harshest anti-smoking legislation in the country. It had already been illegal to smoke in restaurants without full liquor licenses, but these new laws levied massive fines on bar owners whose customers were caught smoking on the premises. Not in the building - on the premises, so that if the building had an awning and someone was smoking under said awning they were breaking the law. Charming.
Bloomberg's reasoning for this move smacked of evasion - he claimed it was unfair to bartenders and the like, unfair for them to work under hazardous conditions. He cited a ridiculously out of date German research paper claiming that barstaff inhaled the equivalent of a pack of cigarettes a month via second-hand smoke. Never mind that that paper was debunked soon after it was initially published by a different German research paper that claimed the figure was closer to three cigarettes a year, and never mind that no one really asked the opinions of the waitstaff themselves, most of which were just as annoyed about the ban as their customers. To all the bartenders I've talked to, working somewhere they can light up was a perk of the job.
There are exceptions to the rules, though not many. Establishments that make most of their money through tobacco sales (ie, cigar bars) were exempted. Private clubs were not subject to the law either, nor were bars with well-ventilated, closed off smoking rooms that barstaff didn't enter. This last one was a bit of a red herring, however - some bars spent huge amounts of money retrofitting their ventilation systems only to be told that the exemption standards had changed and that the exemption they had been going for was no longer available.
This was not (indeed, is not) popular legislation and, combined with the (probably illegal) metrocard fare hike, did irreparable damage to Bloomberg's approval ratings, though how irreparable still remains to be seen.
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Taking all this stuff into account: the ban is severely flawed. There are some very, very easy ways around it if you can't separate the love of the beer in your left hand from the cigarette in your right.
For starters: enforcement of the ban is centered on Manhattan and popular neighborhoods of Brooklyn. It's still technically illegal for you to smoke in, say, Sunnyside or Woodside, but since no one ever checks on bars there most bar owners don't really care that much.
Secondly: Even if the inspectors did care, they don't work after 11PM, even in Manhattan. The clock strikes midnight and bartenders pull out little paper cups filled with cranberry juice to ash in. It's not this secretive thing. Some areas are better about this than others - Gramercy Park, Kips Bay and other sidelined Manhattan neighborhoods are a bit more relaxed than, say, Greenwich Village1. Some clubs let you smoke in them all the time (Lit and The Hole fit this description), though why this is isn't all that clear.
In other words: cheer up! There's always somewhere you can go to avoid this law if it fits your fancy.
1. This also has quite a bit to do with the fact that these areas are traditionally Irish neighborhoods. If any group of people understand the love affair between drinking and smoking, it's the Irish. Bless them.