What are the savings from a drug-free policy?

Many times, laws and the way organizations react are just a form of common sense. Everyone knows and understands what’s going on. They may dislike having to admit understanding and resent paying the additional money. But, the policy of paying to stay within the law makes the most sense over the long term. Take drug abuse as a classic example. Whether people are abusing medications or buying street drugs, they need money.

A small percentage of the population steal to feed their addiction. But the majority are employed. These millions of people work full- or part-time hours, collect their pay checks and spend their earnings unwisely. Now a business might say this is none of their concern. What people do with their money in their own time is a private matter. No doubt, hardline libertarians will be outraged at this intrusion into their privacy for what they perceive as a victimless crime. But the hard reality is rather different.

If people are using drugs while in the workplace, they are almost four times more likely to be involved in an accident than an unimpaired worker. That means they either injure themselves because their concentration is poor or, worse, they injure a fellow employee or member of the public. Worse because employers can face administrative and civil penalties if their employees prove a danger to others. Even if employees are not immediately a cause of injuries, they are generally less productive, more likely to call in sick, and often disruptive. National statistics also show that impaired workers are five times more likely to file a workers’ compensation claim. How should employers react to this? The answer is by ignoring privacy issues. All responsible employers should establish and enforce a drug-free policy in the workplace. In fact, this is required by the Drug-Free Workplace Act of 1988 if the business intends to apply for federal projects or grants. There is similar legislation in most states. As a result, most business insurance companies offer a premium discount for employers with an effective drug-free policy. This varies but is usually between 5 and 7.5%. Obviously, insurers monitor how well the policy is implemented and may withdraw the discount if drug-related claims do not reduce.

Many employers misunderstand the way in which the local workers’ compensation regulations work. The majority of state regulations limit or exclude the payment of benefits if someone is injured as a result of their own intoxication. These regulations do not affect third party claims when an employee or member of the public is injured by the intoxicated employee. Business insurance is always needed to pay out on liability claims. So, the moral is clear. If a business reduces the level of drug-taking by its employees and this is reflected in the number of claims made on the insurance policies, the insurers will offer a continuing premium discount. At a time when other business costs are rising, saving on business insurance is a welcome bonus. Now add in the improvement in productivity if more employees have full concentration, if absenteeism is reduced and the workplace is happier. Finally, remember that drug-free companies can apply for federal and state projects and grants. Overall, every business, regardless of size, is going to feel the benefit of a drug-free policy.

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