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Workers' Compensation Discount for Drug-Free Workplace

Lowering Business Insurance Costs With a Drug-Free Workplace

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Where do drug addicts and abusers earn money to feed their addictions? From full-time employment - that is, working at your business. The Department of Health and Human Services, Substance Abuse and Mental Health Services Administration (SAMSHA) estimated in 2007 of the 17.4 million current illicit drug users aged 18 or older, 13.1 million (75.3 percent) were employed either full or part time.

Impaired workers are a threat to the safety of your business, the public, and other employees. Impaired workers who use drugs are 3.6 times more likely to be involved in a workplace accident according to SAMSHA data. That same data also found that impaired employees are 5 times more likely to make a workers' compensation claim.

One of the ways a business may be able to save workers' compensation premium dollars is through the establishment of a drug-free workplace policy. In fact, if your company intends to receive federal projects or grants, a drug-free workplace policy is mandatory since the implementation of the Drug-free Workplace Act in 1988. Many states (including mine) have passed similar laws with regard to state projects and grants. Also, employers can face significant administrative and civil penalties for damage and injuries caused by impaired employees. So, a drug-free workplace policy just makes sense.

As of the end of 2006, eleven states offer a premium discount on workers' compensation for companies that implement a drug-free workplace. Hawaii also offers a discount for worker safety programs that include drug-free initiatives so it is included. Here is a list:

  • Alabama- §25-5-330 (1995) Provides a 5 percent discount to employers who establish a drug-free workplace in compliance with the act.
  • Arkansas- §11-14-101 (1999) Employers with drug-free workplace programs may qualify for a 5% discount on workers' compensation premiums.
  • Florida- §440.102 (1996)Provides a 5 percent reduction in premiums to employers who implement and maintain a certified drug-free workplace program in accordance with the standards set forth in the Act.
  • Georgia- §33-9-40.2 & §34-9-410 Provides a 7.5 percent discount on workers' compensation premiums to employers who have implemented a drug-free workplace program that is certified by the state Board of Workers' Compensation.
  • Hawaii- §431:14-103 (1997)Provides a discounts of at least 5 percent on premiums to employers who maintain an effective safety and health program.
  • Idaho- SB 1119 (2003)Provides that public employers who conduct drug and alcohol testing of all current and prospective employees shall qualify for and may be granted an employer Workers' Compensation premium reduction.
  • Mississippi- §71-3-201 (1997)Provides for a 5 percent reduction in workers' compensation premiums to employers who establish a drug free workplace program.
  • Ohio- O.A.C. 4123-17-58 Ohio Bureau of Workers' Compensation has issued a rule that provides a five year phased in workers' compensation premium reduction that can rise as high as twenty percent.
  • South Carolina- §38-73-500 (1997) Provides 5 percent discount on workers' compensation premiums to employers who voluntarily establish a drug free workplace program.
  • Tennessee- §50-9-101 (1997) Provides 5 percent discount on premiums to employers who establish a drug free workplace program.
  • Virginia- §65.2-813.2 (1997)Provides a 5 percent premium discount for employers who institute a drug free workplace program.
  • Washington- §49.82.010-.901 (1996) Provides a 5 percent premium discount for employers who implement a drug free workplace program.

Almost all states also exclude payment of benefits to employees injured as a result of their intoxication. The standards differ from state to state. For example, Wisconsin lowers benefit payments by 15% while Wyoming denies benefits and refuses to acknowledge as an "injury" an accident caused by an employee's intoxication. Because of these benefit restrictions, some employers wrongly believe that workers' compensation regulations protect them from suit where the employee is intoxicated. The bar on benefits affects only payments to the employee - not, damages to third-parties or other employees injured by the intoxicated employee.

The premium savings can be substantial and when added to injury reduction, a reduction in absenteeism, the potential for more business with other businesses and governments requiring drug-free workplace, the drug-free workplace program makes sense. There are plenty of sources of information available for employers to learn about creating drug-free workplace policies. For example, the National Institutes of Health offers an excellent website with a great deal of information. Even if you are not an Ohio business, the Ohio BWC website is also an excellent source of information.

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