Debating Drug Test ROI

Staffing Management
October-December 2005

Reprinted with the permission of HR Magazine published by the Society for Human Resource Management (www.shrm.org), Alexandria, VA.

By Stephenie Overman

To test or not to test? Which option has the greater cost?

The percentage of companies that conduct drug tests dropped last year, according to the American Management Association (AMA). The figure is now 62 percent of all U.S. employers. The percentage has been dropping gradually since its peak in 1996, when 81 percent of employers screened pre-employment prospects and workers for illegal substances.

Is the decrease because testing costs aren't worth the return on investment—or is it because testing works and there's less need for it?

It may be that fewer companies are drug testing because they find the number of applicants who test positive is dropping and think, " 'We don't have to invest so much in drug testing at this time.' That may account for some of the drop-off. I'm an optimist," says Elena M. Carr, drug policy coordinator for the U.S. Department of Labor's Working Partners for an Alcohol- and Drug-Free Workplace. But, Carr says, "I think most decreases are economically based. It's expensive."

The Costs of Testing

Testing an applicant or employee ranges from $25 to $44 for urinalysis, according to the AMA. Hair follicle testing costs $75 to $150 per test. Ninety percent of the 55 million drug tests performed in the United States annually are for urinalysis.

While drug testing has become "kind of standard practice" in larger companies over the last 15 years, Carr sees anecdotal evidence that sometimes companies feel that the labor pool is too tight for them to be too choosy.

In the mining industry, for example, Carr finds "there is a reluctance to do pre-employment as well as employee testing because they feel they're not able to get the labor. So that may make someone decide 'this isn't what we want to do now.' "

One Company's Story:
Pre-Screening Works

Keystone RV Co. recently fired 34 out of 120 employees for flunking a drug test (see the April 28 HR Newsstory "Dozens failing drug tests fired, but RV plant keeps rolling" on www.shrm.org). But, according to the company's HR chief, that doesn't mean its preemployment drug testing isn't working.

"If we weren't using pre-employment screening, it would be much worse," says Ken Julian, vice president of administration. "The information I've received indicates that our workforce drug use is lower than most. We've always tried to take the lead in seeing that the workforce is drug-free, and there's word on the street about companies that don't do screening. They say, 'Go work here, you don't have to worry about it.'"

The only change in the pre-employment testing since the firing is that "we use a little more tamper-resistant method," Julian says. Before, the process was not a witnessed drug screen, and "there were a lot of opportunities to bring in somebody else's sample or to alter [the sample]."

Keystone's health care provider initiated the changes after seeing that employees onsite were attempting to alter samples, Julian says. The company was able to quickly screen new applicants and, as usual, make employment offers contingent on a negative result.

The pre-employment urine screening tests for cocaine, amphetamines—including methamphetamine (meth)—marijuana and opiates. Meth is a particular problem in the area where Keystone is located, Julian says. "Elkhart [County, Ind.] has a high meth problem. It's easy to manufacture and distribute." The company has an alliance with local law enforcement, and "the Elkhart County prosecutor has gone to great lengths to curtail the problem. Progress is being made," according to Julian. "It's more of a county problem than [specifically] a workplace problem."

Nationally, employers who screen for drugs saw the number testing positive for amphetamines increase by 6 percent last year, according to a study by Quest Diagnostics Inc. Positive tests for meth, one of two stimulants in that class of drugs, increased by 3 percent. According to Quest Diagnostics, the use of amphetamines grew at a slower pace last year than in previous years.

"If you don't drug test, you're naïve," Julian says. "I would say if you feel you do not have any drug problem you are being naïve." And without the drug screen "you potentially put employees at risk safetywise," Julian says.

"Hazardous conditions rise greatly. To think 'I don't feel we have a problem,' I don't think that's a realistic approach," he adds, especially if you have heavy machinery that can endanger workers.
Lewis Maltby, president of the National Workrights Institute, says employers now realize that drug testing is not a good investment. Testing "was sold on the promise that it would increase safety and productivity. Employers believed. But now they've been using it for 20 years, and they see that it doesn't," Maltby says.

It's not just that the percentage of companies testing for drugs is down; there is a noticeable continual decline. "It went up every year to 1996. It's been down every year since. It's definitely a trend. That number is going to continue to decline, but it's never going to disappear completely," Maltby says. "If a product like drug testing doesn't deliver value to customers, it's got to decline."

Employers worry about hiring "crack heads," but that's not what's going on, he says. "There are very few crack heads in America, fewer in the workforce.The majority of positive drug testing is for marijuana, and most users are weekend pot smokers.Whether someone smokes marijuana on the weekend or drinks beer on the weekend makes no difference on Monday morning.

"When I ran an HR department," Maltby says, "I found if we did a good job of checking references, we didn't need drug testing. If someone had sterling references, we didn't need to check whether they drank beer or smoked marijuana over the weekend. It was not a concern to us."

The Cost of Not Testing

But Melissa Moskal, executive director of the Drug & Alcohol Testing Industry Association, and Mark de Bernardo, founder and executive director of the Institute for a Drug Free Workplace, believe the costs of not testing are too high.

"Remembering that nearly 75 percent of drug abusers are employed, companies can easily justify the cost of drug testing," Moskal says, noting that companies that perform drug testing report a significant reduction in employee turnover, tardiness and absenteeism, plus reductions in injuries, health benefit use and workers' compensation claims.

Industry studies show each drug user in the workplace can cost an employer $11,000 to $13,000 per year because of health care costs, loss of productivity, injuries and damage to equipment.

Employers may have become more selective about testing, de Bernardo says, but "there's no question, in my mind and the minds of employers who use drug testing, that it works. It is cost-effective. Employers have seen that it works.

"There's no question there's a correlation—substance abusers do have more turnover [and] use health care more so that health care costs go up. Accident rates are higher. The impact on the workplace is substantial and pernicious," he says. Besides, "people are engaging in illegal conduct, and that introduces unsavory elements. People will be dealing in the workplace, stealing to support their drug habit, carrying weapons."

Simply having a testing program is a deterrent, according to de Bernardo, because it screens out applicants who use drugs. And when competitors test their job applicants, "there's subtle pressure for you to do drug testing. You don't want to be the repository of other companies' rejects."

If a company stops its pre-employment testing, "that says that you now accept drug abuse. That may not be your intended message, but that's the message a company is sending when it retreats from drug testing," de Bernardo says.

Dale Masi, president and CEO of Masi Research Consultants, a company that specializes in employee assistance programs, agrees. "It's clearly foolish not to test for preemployment. If you don't have [a workplace problem], you're going to get it," she says. Drug testing is a preventive measure, she says. Although companies must factor in the testing costs, "you are saving money at the other end."

If a company decides to do pre-employment drug testing, it may end up in a catch-22 situation, according to Louis C. Rabaut, a partner with Warner, Norcross & Judd in Grand Rapids, Mich.

The Americans with Disabilities Act (ADA) does not preclude employers from conducting pre-offer drug testing. However, the act does prohibit pre-offer medical examinations, which, in the past, have been used in such a way as to exclude applicants with disabilities even before their ability to perform a job was evaluated.

Similarly, Equal Employment Opportunity Commission (EEOC) guidelines state that an employer may not make medical inquiries of job applicants before making a job offer.

Part of any thorough drug testing process, however, involves asking applicants whether they are taking any prescribed medications.

This is a medical inquiry, the EEOC states, and it cannot be made until a conditional offer of employment has been extended.

Most employers avoid this catch-22 situation, according to Rabaut, by requiring the applicant to submit to the drug test at the same time as the medical examination -- after a conditional offer of employment has been extended.

Is It Right for You?

When deciding whether or not to test applicants or employees, employers need to consider several factors. Among these factors are the cost of the tests themselves weighed against their potential benefits.

One way to think about potential benefits is to look at your company's accident rates and health care costs. If these figures are above the average for the industry and your company size, and drug testing for new hires is not in place, a pilot program may help you determine whether a companywide test policy would have an impact.

If you decide on a pilot program, you may want to limit it to one department or division in which you suspect drug use may be a problem or in which employees using drugs would pose the greatest safety risks.

Then you can watch the accident rates and health care costs for that group to see whether they go down significantly with drug testing. If so, you may want to think about a companywide program or an extension to other departments or divisions.

Of course, employers need to be careful in structuring a pilot program so that it doesn't discriminate against employees of any race, ethnicity or age group. In addition, state and local laws vary when it comes to drug testing. Employers are advised to check with legal counsel before beginning any testing program.

Stephenie Overman is a freelance writer based in Arlington, Va.