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Addressing drug-related workers’ compensation costs with drug testing, P.1

Workers’ compensation insurance is something all employers are required to carry, and there are penalties and consequences for failing to carry insurance coverage. For employers, then, workers’ compensation is one of the necessary costs of doing business, but it is also important for employers to do what they can to control workers’ compensation costs.

There are a variety of ways workers’ compensation costs can spiral out of control, from failure to properly select and train employees to failing to adequately address workers’ compensation fraud. Another potential source of unnecessary workers’ compensation costs is workplace drug and alcohol abuse

Drug abuse can increase costs for employers in a number of ways, including increasing rates of tardiness and absenteeism, lowering productivity, increasing use of medical benefits, and increasing the rate of workplace accidents. Studies have shown that nearly half of workplace accidents resulting in injury and about 40 percent of workplace accidents resulting in death involve either alcohol or drugs.

Workplace accidents can result in increased workers’ compensation premiums for employers, and sometimes lawsuits. These costs contribute to loss of profits. For smaller businesses, there is less of an ability to absorb these costs, which can mean financial trouble. Smaller companies where employee turnover is higher—particularly companies that rely on temporary, part-time workers—are especially at risk for drug abuse-related accidents.

Employers need to do what they can, of course, to address drug and alcohol abuse among employees. In future posts, we’ll look at the use of drug testing in the workplace to address this issue and the importance of working with experienced legal counsel to represent a business’ interests in this area. 

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