From the June 2000 issue of Entrepreneur

These days, it seems employee drug testing has become about as commonplace as providing business cards. Chances are, if you don't already have a drug-testing policy, you're probably considering instituting one. And for the most part, potential and existing employees have even come to accept it as a part of the present-day job process. So why, when drug testing appears to be such a vital part of the modern American workplace, are some small-business owners and experts re-evaluating whether it's really good for business?

According to Daniel Abrahamson, legal affairs director for the Lindesmith Center in San Francisco, "Employers need to think hard about why they're drug testing; what their bottom line is."



Chris Penttila is a freelance journalist who covers workplace issues from her home base in the Chapel Hill, North Carolina, area. She can be reached at chris@sitting-duck.com or through her Web site, www.sitting-duck.com.

Everybody's Doing It

Most employers test for drug use because they believe it curbs accidents, increases productivity and enhances the bottom line. In fact, in a 1999 American Management Association (AMA) study, 83 percent of employers surveyed indicated they believe drug testing deters employee drug use.

This kind of faith in drug testing has attracted growing popularity over the years. The AMA found that the percentage of U.S. companies testing for drugs increased threefold, from 21.5 to 81 percent, between 1986 and 1996. Mark de Bernardo, executive director of the Institute for a Drug-Free Workplace, insists that drug testing increases employee productivity. "Eleven percent of the work force has engaged in illegal drug use," he says. "Drug testing is an area you don't want to compromise. We have safer and more productive workplaces because of it."

Recent research, however, questions the importance of traditional workplace drug testing. Last fall, the National Academy of Sciences issued a report saying off-duty use of illegal drugs contributed little to workplace accidents. In addition, a survey of 63 Silicon Valley-area companies, conducted by the Le Moyne College Institute of Industrial Relations in Syracuse, New York, found that productivity was actually about 16 percent lower in companies with pre-employment testing and 29 percent lower in firms that used both pre-employment and random testing. Why? The researchers speculated that talented workers in a tight labor market prefer to seek out employers who don't test for drugs.

A Big Decision

Suppose you're testing your employees for drugs and you discover your most productive and knowledgeable employee failed a random drug test because of some off-duty marijuana use last Saturday night. Will you actually follow through and fire her? Or that promising applicant with the niche skills you so desperately need who didn't pass the test: Are you sure you want to let him get away? In today's tight job market, situations like these can be difficult, and small companies struggling with growth have it particularly rough. "Especially in high-tech right now, employers generally aren't willing to exclude 'puffers,' " says Abrahamson. "Too many are too educated and good at what they do."

Even an advocate of drug testing like de Bernardo admits that a tight job market can change the way that employers approach the issue of drug testing in the workplace. "Employers tend to relax their standards," he says. "[Lowering the standard] does occur. But it's not a positive thing in the long run."

Keith Snyder, CEO of 5-year-old Snyder Party Rental and Event Services in Charleston, South Carolina, has flirted with the idea of testing his 30 full-time employees and has called for estimates in the past. His current strategy can best be described as "don't ask, don't tell." When hiring, he conducts a background check but stops at that. "For now, I don't want to know if my employees use drugs," Snyder, 34, says. "I've been trying to find a dishwasher for two months. I can't afford to lose people."

Snyder adds that he doesn't feel comfortable judging the workers at his company, which had sales of $2 million in 1999, for the things they do off the job. "Can I fire a good employee for something done outside of work?" he asks. "When it comes down to it, no. I'm not willing to make that choice."

Raj Thiyagarajan, 34, CEO of Msys Inc. in Cary, North Carolina, doesn't test his employees because he prefers to have faith that they'll do the right thing. His business, which does application and Web site development for Fortune 500 companies, doesn't test any of its 40 employees. This isn't because of cost, Thiyagarajan explains, but because he believes in the trust factor. He says that to date, he hasn't encountered any problems with his employees and would want evidence of drug use before taking action. He adds that he'd know if a worker's productivity was dropping off. "Drug addicts wouldn't last long," he says. "We'd be able to tell if they weren't performing well."

Eric Greenberg, director of management studies for the AMA, has this advice for small employers: "Don't ask the question unless you're ready for the answer."

Money Going Up In Smoke?

While productivity is certainly an issue, so is cost. The National Academy of Sciences estimates that U.S. companies as a whole spend almost $1.2 billion annually on drug testing. Most of the companies that took part in the AMA study, however, had never measured the cost-effectiveness of their drug-testing programs. Greenberg says that's because, in the big picture, drug testing isn't all that expensive. The typical cost for a business is only between $35 and $50 per employee. In fact, three-fourths of the companies Greenberg surveyed in 1996 spent less than $5,000 annually on drug testing, especially if they were conducting random tests that only focused on certain departments.

"Because costs aren't large, companies don't do cost analyses," he says. He adds that if, for example, a company is spending $1,000 to test its employees and cost analysis costs the company $2,000, most companies will choose the cheaper option, even though cost analysis might save more money in the long term.

Lewis Maltby, president of the National Workrights Institute, thinks that drug testing is often an "image thing" for big companies. "One large employer told me, 'I don't care if my drug testing lowers accidents and increases productivity. I have government contracts and stockholders. I need to protect my image, and this is pocket change,' " he says.

If you're the owner of a young company, however, the money spent to test employees is more than pocket change; it's money from which you want to see dividends. You'd like to know that it's not going up in smoke. According to Maltby, $2,500 is a significant investment for a small company, and the decision to drug test is hard to make unless there are benefits to testing. In fact, he says, many of today's large companies are quietly changing their programs to conduct fewer random tests to save money.

But many large firms will attest to the benefits of drug education and awareness. According to Greenberg, companies that combined testing with education reported their employees were 33 to 50 percent less likely to report employees testing positive for drug use than businesses lacking a drug-education program. "There's no statistical evidence that testing reduces drug use, but education does," he says.

Abrahamson calls education the "preventative component" and believes employers can benefit most when it's combined with options for treatment. "If you're committed as a small-business employer, you want to address the issue and help the employee, either through counseling or treatment," he says.

Another alternative to traditional drug screening is performance-based testing, also referred to as impairment testing. With this approach, jobs are analyzed to see if they pose a threat to safety, and the employees who hold them are subject to random skill, reflex and mental-processing tests to determine any impairments. Abrahamson says that performance-based testing could be a beneficial way for employers to go: Such tests are based on up-to-the-minute job skill assessment rather than a judgment of drug use, and employees are more likely to accept that as fair.

When It's Right

How can you know if a drug-testing program will ultimately benefit your business? In the end, it depends on your ability to accept the results of the test and follow through on them. When considering pre-employment or random testing, says Abrahamson, "Employers need to ask themselves, 'Will this get me where I want to go?' "

If you think it might be right for your business, make sure you do it right. First, see a lawyer who can explain the workplace drug-testing laws in your state, because some states have eliminated or restricted certain types of testing. Second, check to see that the drug-testing company you choose is certified federally as well as in your state. This is important, because choosing a company with poorly designed tests can lead to false-positive results and potential liabilities. Also, know that even though scientific advances have made hair and sweat testing available, urine testing remains the most reliable and accurate method for drug screening. Finally, as you set up your program, follow the drug-testing guidelines suggested by the Department of Health and Human Services. And make sure your employees understand the policy.


Next Step

  • www.os.dhhs.gov: Federal regulations and articles about drug testing in the workplace
  • www.drugfreeworkplace.org: Information about workplace drug testing programs, surveys and opportunities for contact with other entrepreneurs
  • www.lindesmith.org: Links to recent news about drug policies, a library database, articles and pamphlets written by staff researchers and experts

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