US Drug Test Centers Research Articles

Workers Compensation and the Financial Benefits with Employee Drug Testing

Posted: Jun 17 2019

business man counting coins to save money

By: Jonathan Baktari, MD / CEO

In the United States, employee drug testing has been around for more than 40 years. The test methods and rules related to drug testing, on both the federal and state levels, continue to evolve. Today, there are more than 600 state statutes and regulations that can impact an employee drug testing program. There are more than 12,000 court and agency decisions[1] related to testing.

In the beginning, drug testing was all about compliance with federal rules and then quickly evolved with state-specific laws that employers also needed to be aware of and to comply with. The overall goal was to keep those individuals who would not adhere to company rules out of our workplaces, in the name of safety.

Employers benefit from a long list of advantages for conducting drug testing, including increased safety and productivity. Now, employers are beginning to recognize that drug testing programs also present attractive financial opportunities. These opportunities are not just in the form of refusing to hire or firing those who would instead use drugs than get or keep their jobs. Employers can benefit from leveraging voluntary state-specific Drug-Free Workplace Programs (DFWP), workers' compensation intoxication defenses, and unemployment claim defenses to positively impact the company's bottom line.

Drug-Free Workplace Programs (DFWP)

Employers may be eligible for a discount on their workers' compensation insurance premiums, so long as an appropriate Drug-Free Workplace Program (DFWP) is established. Complying with DFWP rules are voluntary for employers. However, if a company wishes to use drug testing to reduce their workers' compensation insurance premiums, they must comply with the rules to qualify for the benefits.

Currently, more than a dozen states offer some incentive(s) in exchange for an employer willing to establish a drug-free workplace program or that meets detailed state-specific criteria. These incentives typically come in the form of workers' compensation insurance premium discounts ranging from 5% to 7.5%.

Each state has different requirements, but most commonly have requirements for developing a written company policy, specific screening methods, drug testing panels, laboratory specifications, the necessity of a Medical Review Officer (MRO), notice and specimen challenge rules, and other standard requirements.

Do you want to leverage your employee drug testing program to put money back in your company's bottom line? Contact US Drug Test Centers today to find out how!

Intoxication Defense to a Workers' Compensation Claim

Another key benefit that can directly impact your company’s bottom line is defeating a workers' compensation claim when the injured employee tests positive for drugs or alcohol. The intoxication defense has existed for nearly as long as workers' compensation itself.

In the past, it was difficult for employers to succeed in defeating claims, mainly because in most states' employers had to prove (1) that the employee was intoxicated, and (2) that the intoxication "caused" the accident and injuries.

When drug testing appeared in the workplace, legislatures began using it to ease the difficulty employers were having proving the intoxication defense. Nearly every state now has an intoxication defense to a worker's compensation claim. Employers should take notice and utilize this defense whenever possible.

Many states have also evolved to offer employers the benefit of a "rebuttable presumption of intoxication" defense to a workers' compensation claim. This essentially means that so long as the rules are followed, a positive test will "prove" that the employee was under the influence and that intoxication caused the incident.

Traditionally two things must be proven:

  1. The employee was intoxicated.
  2. The intoxication caused the injuries.

Each state law is different, and these details matter. Some states have a basic set of rules, and other states have very complicated rules that must be met. Here are two examples to compare.

North Dakota (T. 65, Sec.65-01-11)[2]

The legislative language is a single paragraph and creates a rebuttable presumption that the injury was due to impairment if:

  • Test for alcohol at or above DOT level, or
  • Positive test for illegal drugs per DOT level.
  • Test conducted by MD, qualified technician, chemist, or registered nurse.
  • Test may be requested by an employer with mandatory post-accident policy or MD or employer with "reasonable grounds" to suspect impairment.
  • Refusal = automatic forfeiture of benefits.
  • If death benefits requested, death certificate rules.

Compare that to the law in Kansas.

Kansas (Sec. 44-501(2))[3]

The legislative language has particular rules:

Employer is NOT liable where injury was contributed to by the employee's use or consumption of alcohol or any drug (with limited exceptions); It shall be conclusively presumed that the employee was impaired due to alcohol or drugs if at the time of the injury the employee has alcohol level of 0.04 or more or a GC/MS confirmatory test showing concentrations at or above specified cutoff levels.

NOTE: The cutoff levels for cocaine (150ng/mL) and amphetamine (500ng/mL) differ from SAMHSA/DOT.

The results of a drug test can be used if:

(A) As a result of an employer-mandated drug testing policy, in place in writing prior to the date of accident or injury, requiring any worker to submit to testing for drugs or alcohol;

(B) during an autopsy or in the normal course of medical treatment for reasons related to the health and welfare of the injured worker and not at the direction of the employer;

(C) the worker, prior to the date and time of the accident or injury, gave written consent to the employer that the worker would voluntarily submit to a chemical test for drugs or alcohol following any accident or injury;

(D) the worker voluntarily agrees to submit to a chemical test for drugs or alcohol following any accident or injury; or

(E) as a result of federal or state law or a federal or state rule or regulation having the force and effect of law requiring a post-injury testing program and such required program was properly implemented at the time of testing.

The results of a drug test cannot be used unless:

(A) The test sample was collected within a reasonable time following the accident or injury;

(B) the collecting and labeling of the test sample was performed by or under the supervision of a licensed health care professional;

(C) the test was performed by a laboratory approved by the United States department of health and human services or licensed by the department of health and environment, except that a blood sample may be tested for alcohol content by a laboratory commonly used for that purpose by state law enforcement agencies;

(D) the test was confirmed by gas chromatography-mass spectroscopy or other comparably reliable analytical method, except that no such confirmation is required for a blood alcohol sample;

(E) the foundation evidence must establish, beyond a reasonable doubt, that the test results were from the sample taken from the employee; and

(F) a split sample sufficient for testing shall be retained and made available to the employee within 48 hours of a positive test.

Refusal: An employee's refusal to submit to a test may not be used unless there was probable cause to believe the employee used, possessed or was impaired while at work.

As you can see, the rules in each state will differ. It is essential to clearly understand the laws in each of the state(s) that your company conducts business.

Unemployment Claim Defense

All states have some form of unemployment or "employment security" claim defense. Most state laws list specific employee actions that may result in a loss of benefits. "Misconduct" related to work is typically among those actions. How misconduct is defined differs from state to state, and it's recommended that your employee drug testing policy clearly explains what your company describes as "misconduct."

two women looking at a monitorSimilar to workers' compensation claim defenses, state unemployment claim defenses range from simple to very complex. Not all laws mention or provide for drug or alcohol use. Let's look at some examples:

Illinois (820 ILCS 405/602) (from Ch. 48, par. 432)[4] 

Sec. 602. Discharge for misconduct - Felony.

  1. An individual shall be ineligible for benefits for the week in which he has been discharged for misconduct connected with his work . . . For purposes of this subsection, the term "misconduct" means the deliberate and willful violation of a reasonable rule or policy of the employing unit, governing the individual's behavior in performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit.

The previous definition notwithstanding, "misconduct" shall include any of the following work-related circumstances:

* * *

  1. Consuming alcohol or illegal or non-prescribed prescription drugs or using an impairing substance in an off-label manner, on the employer's premises during working hours in violation of the employer's policies.
  1. Reporting to work under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer's policies, unless the individual is compelled to report to work by the employer outside of scheduled, and on-call working hours and informs the employer that he or she is under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer's policies.

Nothing in paragraph 6 or 7 prohibits the lawful use of over-the-counter drug products provided that the medication does not affect the safe performance of the employee's work duties. 

Alabama (Code Sec. 25-4-78)[5]

Disqualifications for benefits.

An individual shall be disqualified for total or partial unemployment:

* * *


  1. If he was discharged or removed from his work for . . . the use of illegal drugs after previous warning or for the refusal to submit to or cooperate with a blood or urine test after previous warning . . .

* * *

(i) A confirmed positive drug test that is conducted and evaluated according to standards set forth for the conduct and evaluation of such tests by the U.S. Department of Transportation in 49 C.F.R. Part 40 or standards shown by the employer to be otherwise reliable shall be a conclusive presumption of impairment by illegal drugs. No unemployment compensation benefits shall be allowed to an employee having a confirmed positive drug test if the employee had been warned that such a positive test could result in dismissal pursuant to a reasonable drug policy.

A drug policy shall be deemed reasonable if the employer shows that all employees of the employer regardless of position or classification, are subject to testing under the policy, and in those instances in which the employer offers as the basis for disqualification from unemployment compensation benefits the results obtained pursuant to additional testing imposed on some but not all classifications, if the employer can also offer some rational basis for conducting such additional testing. Further, no unemployment compensation benefits shall be allowed if the employee refuses to submit to or cooperate with a blood or urine test as set forth above, or if the employee knowingly alters or adulterates the blood or urine specimen.

(ii) For purposes of paragraph a. and item (i) of paragraph a. of this subdivision, "warning" shall mean that the employee has been advised in writing of the provisions of the employer's drug policy and that either testing positive pursuant to the standards referenced above or the refusal to submit to or cooperate with a blood or urine test as set out in the above referenced standards could result in termination of employment. This written notification as herein described shall constitute a "warning" as used in paragraph a. and item (i) of paragraph a. of this subdivision.

As you can see, there are individual differences. It's critical to understand the specific language and requirements of the law in each state your company operates in and that those rules are implemented into state-specific policies, procedures, and training.

Compliance = Savings

Did you know the cost savings by leveraging these financial benefits can potentially cover the costs of your entire employee drug testing program? Contact US Drug Test Centers today to find out how!

A Society for Human Resource Management (SHRM) survey from 2011[6] found the number of employers reporting high workers compensation incident rates decreased by approximately 50% after introducing drug testing. Insurance providers look at standard measures to calculate the cost of a company's workers compensation premiums. A critical factor measured is a company's Experience Modification Rate.

Experience Modification Rate (e-mod)

A company's experience modification factor (e-mod) is a barometer of your historical worker's compensation experience.  An e-mod of 1.0 represents the average for your industry class. Anything higher represents experience worse than your industry average; anything lower is better than your industry average. Many employers think an e-mod of 1.0 is good. Not so—it's only average.

Would you be satisfied if other aspects of your business, such as quality, sales goals, or customer satisfaction scored an average or a "C" grade for performance? If not, you shouldn't be satisfied with a 1.0 e-mod. Learn what the minimum e-mod is and set a target to get there. Utilizing a compliant drug testing program is a vital component in your company's e-mod and reducing your insurance costs.

Employer Expectations

Employers are again cautioned to clearly understand the benefits available to them, along with the details rules that they must follow should they wish to comply and leverage the financial benefits voluntarily. Ensure that your company policy, procedures, handbooks, situational checklists, and other tools list the necessary steps to take in the "heat of the moment." Inform your employees about the company's workers compensation program during their onboarding process.

Educate your employees on what to expect if they have a work-related incident or injury. Explain their rights and responsibilities should an incident or injury occur. Communicate to your employees about the company's expectations for strict adherence to safety standards, same day reporting of any injuries, and compliance with your return-to-work program. Spend the time to train your supervisors and managers as they will be the gatekeepers to compliance for your company.

Contact US Drug Test Centers today to learn how you can save money with employee drug testing! 866-566-0261







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