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Does Your Workers’ Compensation Program Include Drug-Free Workplace Strategies?

By James Timothy White

In today’s workplace, drug use among employees is common. In fact, the National Institute on Drug Abuse (NIDA) reports that more than 70 million Americans aged 12 and older have tried illegal drugs, and the number of current illicit drug users in America has reached an all-time high of 22.9 million people aged 12 or older.

Nearly $18 billion in direct costs are spent annually to combat drug use, including the cost of workplace accidents, absenteeism and health problems stemming from drug abuse.

In 2002 alone employers paid out approximately $186 billion in workers’ compensation claims for injuries sustained on the job. More than 50% of all worker’s compensation claims were attributed to drug and alcohol abuse.

Additionally, workers’ compensation costs are now the second-highest component of company operating costs in the U.S., behind labor costs, with more than $200 billion paid to injured workers since 1982.

The cost of drugs in the workplace is staggering:

Legal substances such as tobacco products add another $93 billion to U.S. company health costs. In California, the workers’ compensation insurance rate increase for 2002 cost employers an additional $224 million in premium payments alone.

A drug-free workplace is a profitable workplace

  • Analysis reveals that productivity improves when workers are positive, healthy, and happy.
  • Employers who consistently implement effective drug-free workplace programs report a 40% reduction in workers’ compensation costs, compared with companies without these policies.
  • Employers can now identify drug use by urine testing as standard practice — saving them more than $5 for every dollar spent on drug testing.
  • A survey of employers who have implemented zero-tolerance (drug and alcohol) workplace safety programs has shown that accidents and workers’ compensation claims have been reduced by an average of 30% within the first year.
  • The benefit is also seen in increased morale, a more stable workforce due to reduced turnover, and enhanced employee productivity.
  • It’s no coincidence that successful drug-free workplace programs include policies regarding workers’ compensation, safety regulations, the use of alcohol, and the presence of other legal substances.
  • Drug-free workplace policies can be implemented immediately by all employers regardless of size or industry, making drug prevention a universal issue that applies to every organization.

The cost savings which result from implementing a comprehensive drug-free policy far outweigh the small investment required to make them work. In fact, the NIDA reports that drug testing can pay for itself many times over. For example, an employer with 1,000 workers who adopt and enforce a drug-free workplace policy would save between $341,197 – $1.25 million each year indirect costs associated with health care and workers’ compensation claims alone.

NIDA reports that employers who implement drug-free workplace policies also realize:

  • More job applicants
  • Reduced absenteeism and turnover rates
  • Increased productivity
  • Improved employee morale

Drug testing and a zero-tolerance policy for alcohol and other drugs in the workplace can reduce workers’ compensation costs, increase productivity, improve employee relations and enhance safety on the job.

Did you know?

  • Workers’ compensation costs are directly linked to insurance premiums. The more costly workers’ compensation claims become, the higher health care insurance premiums will rise for all workers and employers alike.
  • Companies see a direct link between their drug prevention policies, improved productivity rates, and reduced workers’ compensation costs.
  • Drug-free workplace programs should include testing as well as other policies to deter drug use.
  • Workers’ compensation costs can be reduced by simply making a drug-free policy an integral part of the company’s overall health and safety program.
  • The cost savings which result from implementing a comprehensive drug-free policy far outweigh the small investment required to make them work. In fact, the NIDA reports that drug testing can pay for itself many times over. For example, an employer with 1,000 workers who adopt and enforce a drug-free workplace policy would save between $341,197 – $1.25 million each year indirect costs associated with health care and workers’ compensation claims alone.

A drug-free workplace policy is also an effective way to protect your business and your workers’ comp costs. Avoid dangerous situations involving alcohol, other drugs, and the acceptance of bribes by not allowing drug or alcohol use on the job.  The following are questions that all employers should think about:

  • Has your workers’ compensation coverage ever been threatened by drug or alcohol use?
  • Does your drug-free workplace policy include a comprehensive written workers’ compensation program?
  • Are employees required to pass drug tests before they are hired?
  • Does your drug-free workplace policy include workers’ compensation coverage for employees with substance abuse problems?
  • Are you aware of the cost benefits that a drug-free workplace can provide?
  • Is drug testing part of the drug-free policy?
  • Are supervisors and managers included in the drug-free policy?
  • Does your personnel policy address the problem of alcohol and drug abuse?
  • Is your business prepared for employee-related workers’ compensation issues?
  • Are you proactive in dealing with drug- or alcohol-related workers’ compensation issues?
  • Use drug testing early in the hiring process, particularly for jobs where an employee can be expected to operate or service expensive equipment.
  • Do not allow alcohol and drug use on your property—even if you are an employer who has a “laid back” attitude about lifestyle choices.
  • Always enforce your workers’ compensation policies consistently so that no one can claim unfair treatment.
  • Have your company policies available for all employees at the time of hire and as part of orientation so that they get the message right away about drug use in the workplace.
  • Has you implements a training policy to train supervisors on reasonable suspicion and employees on the how to recognize the signs and symptoms of drug and alcohol misuse and abuse in the workplace?

Workers’ compensation costs directly affect your workers’ comp premium costs, which can be passed along to customers. If you do not currently have a comprehensive drug-free workplace policy, it’s time to put one into place. If you already have a drug-free policy in place, be sure that the appropriate language is included in your workers’ compensation policy. A good comprehensive drug prevention program should include testing and non–testing components.

To find out how to help control high workers’ compensation premium costs, consider drug and alcohol testing as a proactive measure that may help with workers’ compensation costs. To learn more about high workers’ compensation premium costs, consider visiting the NIDA Web site at www.drugabuse.gov or calling us at 1-888-390-5574.

The information on this page may have changed since we first published it. We give great legal advice, but this page (and the rest of our site) is for informational use only and is no substitute for actual legal advice. If you’d like to establish an attorney-client relationship, reach out to us and we’ll tell you how we can make it official. Sending us an email or reading this page alone doesn’t mean we represent you.

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