How Drug Testing in the Construction Industry Affects Your Work Comp Costs
By Michael L Carlson

Here in Texas, it has been difficult to influence employers to implement drug testing in the workplace. In the construction industry, it has been even more difficult. As employees come and go so rapidly, employers fail to recognize the benefits of drug testing. According to Jonathan Gerber of Cornell University, a new study reveals; “construction companies that drug test appear to be successfully reducing workplace injuries”. Drug testing was unheard of twenty years ago. Recent studies have estimated that as high as 49% of employers nationwide have implemented some form of drug testing.

The incidence of high numbers of alcohol and drug abuse in the construction industry along with the high risk of workplace injuries have caused most construction companies in Texas to at least give lip service to drug testing. Many insurance companies now require that the construction company submit their employee manual regarding safety to qualify for insurance.

Jonathan Gerber’s study entitled “An Evaluation of Drug Testing in the Workplace: A Study of the Construction Industry,” found the following:

1.    Within two years of starting a drug-testing program, the injury rate had decreased by over 50%.

2.    If you decrease injuries, you will in almost always reduce the workers’ compensation experience-rating modification factor. Companies implementing drug-testing programs experienced greater reductions in the experience-rating modification factor than those that did not implement drug testing. Over 70% of employers with drug-testing programs said that the benefits of drug testing outweighed the cost of the program.

3.    A drug-testing program that is fully supported by the employer with benefit the employer in three ways: lower workers’ compensation costs, greater safety in the workplace and a better quality of job applicants.

4.    Because of the nature of how the workers’ compensation experience modifier is calculated, the first three years after the drug-testing program has started will experience the greatest reduction in the experience modifier. Remember other factors may and will also play into this calculation.

5.    Safety is the number one reason why employers drug-test their employees. The best employers drug-test job applicants. This enhances the employer’s image because current employees understand the employer’s commitment to safety. Drug-testing job applicants also deters applicants the use and abuse drugs and alcohol.

6.    Cost is the number one reason that employers do not drug-test. Perceived exposure to legal liability is the other prime reason. Here’s the reason for the legal liability concern. If you commit to drug testing, you must drug-test all employees. Failure to drug-test even one employee can result in additional liability exposure if that one employee causes harm to property or another employee. Once you commit to drug testing you have to keep drug testing.

7.    You will find that virtually all large construction companies drug test. They have the resources to commit to faithfully drug test. Smaller companies with fewer resources are more likely to avoid drug testing. The real problem is that job applicants know who drug-tests and who doesn’t drug-test. For this reason, employees with abuse problems gravitate to these companies.

So is drug-testing being to costly? In addition to the saving from the reduction to your experience modifier, you reduce your exposure to general liability claims. If your employee is intoxicated or high on the job, he may cause damage to either a third party’s property or to the third party or another employee. This could be a negligence claim. Texas lawyers like general liability claim litigation more than work comp litigation. They also like any type of negligence claim. The work comp system took away lump sum settlements years ago, but this is not true in general liability claims. The small employer is putting his/her business at risk by not drug-testing. I have seen high insurance costs or the inability to obtain insurance cause many small construction companies to go out of business. Drug testing is not too costly. Properly administrated, drug testing can put more money to the bottom line.

The author, Michael L Carlson has over twenty four years of experience in the commercial insurance business in Texas. He is licensed in Property and Casualty and Health Insurance. He is also licensed as a Risk Manager. He has specialized in Workers’ Compensation and Texas Occupational Accident Insurance. Michael has completed studies in the Certified Insurance Counselor Program, The Certified Work Comp Program and The Certified Wealth Preservation Planner. Michael works with Time Insurance Agency in Austin, Texas. Visit Michael’s blog “Work Comp Issues in Texas” at: http://workcomptexas.blogspot.com. You can visit the Time Insurance Agency Website at [http://www.timeinsurance.com].

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