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                                                       Calendar No. 656
105th Congress                                                   Report

 2d Session                                                     105-348

                    DRUG-FREE WORKPLACE ACT OF 1998


               September 25, 1998.--Ordered to be printed


Mr. Bond, from the Committee on Small Business, submitted the following

                              R E P O R T

                        [To accompany H.R. 3853]

    The Committee on Small Business reported an act to promote 
drug-free workplace programs, having considered the same, 
reports favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill as amended do pass.

                            I. Introduction

    The Drug-Free Workplace Act is a bill to initiate a 
demonstration program designed to aid small business in the 
establishment of drug-free workplace programs through Fiscal 
Years 1999 and 2000 and to encourage states to offer other 
incentives for the same. On June 24, 1998, the Committee on 
Small Business received H.R. 3852 having passed the House of 
Representatives on a vote of 402-9. On September 15 1998, the 
Committee on Small Business conducted a mark up of this 
legislation. The Committee adopted a substitute amendment by 
unanimous consent and subsequently voted 18-0 for the amended 
    The Committee has been aware that the abuse of drugs and 
alcohol in the workplace is a significant hazard to working 
Americans, and a serious drain on the economy in terms of lost 
productivity, increased health costs and wasted potential. 
Small businesses employ the vast majority of American workers.
    In 1996, Substance Abuse and Mental Health Services 
Administration's (SAMHSA) reported in ``An Analysis of Worker 
Drug Use and Workplace Policies and Programs'' that 8.1% of 
employees in companies with 1-499 employees report illicit drug 
use, as compared to 5.4% of employees in businesses with 500 
and more employees reported illicit drug use. The report states 
that in 1994, 82% of all employees work for companies having 
between 1-499 employees and 87% of the employees reporting 
illicit drug use work for such companies. The report also shows 
that 84% of employees reporting heavy alcohol use work for 
small businesses with less than 500 employees. Further, the 
Institute for Drug-Free workplace estimates that a majority of 
illicit drug users work for small businesses with less than 25 
employees. Furthermore, the 1996 Conference Board Survey 
estimated the cost of the economy from absenteeism, injuries 
and diminished productivity to be $200 billion.
    The Committee recognizes these statistics point to a 
problem in our society that goes beyond the economic costs. The 
costs to families and children due to problems associated with 
substance abuse can be difficult to quantify. H.R. 3853 will 
address both the conspicuous and hidden damage substance abuse 
causes through assuring that workplace-based programs include 
an avenue of employee intervention and assistance that could 
lead to life-changing treatment.
    The bill would authorize awarding eligible intermediaries 
with experience in drug-free workplace programs' grants to 
establish drug-free workplace programs for use by small 
businesses. In addition, the bill provides sunsetted 
authorization for Small Business Development Centers to provide 
assistance and information on drug-free workplace programs. 
These programs will encourage employers to offer and use a 
variety of strategies of employee assistance, training and 
intervention to reduce abuse problems.

                        II. Description of Bill

    Section 1 designates the bill as the ``Drug-Free Workplace 
Act of 1998.'' Sections 2 and 3 contain congressional findings, 
purposes and a sense of Congress encouraging states to adopt 
drug-free workplace incentives.
    Section 4 amends the Small Business Act to establish the 
Drug-Free Workplace Demonstration Program. Under new Section 27 
(hereinafter ``Section 27'') of the Small Business Act, the 
Small Business Administration (SBA) is authorized to offer 
grants on a competitive basis to eligible intermediary 
organizations to provide technical and financial assistance to 
small businesses for the purpose of establishing drug-free 
workplace programs.
    Section 27(a) defines an ``eligible intermediary'' as an 
organization located in the United States established to 
develop comprehensive drug-free workplace programs or to supply 
drug-free workplace services or to provide other assistance and 
services to small businesses. Eligible intermediaries must have 
a specific history of no less than two-years experience in 
establishing drug-free workplace programs and have an existing 
drug-free workplace program themselves. Nothing in this Section 
is intended to encourage competition between profit and not-
for-profit organizations. Section 27(a) defines the term 
``employee'' expansively, including employees and applicants 
for employment as well as supervisors, managers, and the owners 
and officers who are active in the management of the small 
    The Committee intends for the grants to be awarded to 
intermediaries to provide technical assistance to employers 
desiring to implement such programs in their workplace and to 
reduce the costs to employers for establishing and maintaining 
such programs. It is the Committee's intention that SBA 
implement this program that it provides the intermediaries with 
the flexibility to determine how best to provide such financial 
and technical assistance. Intermediaries should provide 
employers with guidance, while allowing each employer to design 
the specifics of their drug-free workplace program. For 
instance, an intermediary may serve as the third-party 
administrator for an employer's drug-free workplace program and 
provide such service at a reduced fee. Another approach would 
be to provide services associated with maintaining such a 
program at no charge or with reimbursement for the costs 
incurred by the small business. The flexibility in the statute 
is intended to allow intermediaries knowledgeable in drug-
testing to devise innovative ways to provide financial and 
technical assistance to small businesses desiring to implement 
drug-free workplace programs.
    Section 27(a) sets forth the minimum requirements for any 
drug-free workplace program established under Section 27 of the 
Small Business Act. Under Section 27(a), a drug-free workplace 
program must include: (1) a clear written policy, (2) a minimum 
of two hours of alcohol and drug abuse prevention training for 
all employees, (3) voluntary additional training for working 
parents, (4) drug testing with analysis by a certified 
laboratory and each positive test being reviewed by a medical 
review officer, (5) access to qualified substance abuse 
professionals, including employee assistance programs that 
include assessment, referral and short-term problem resolution, 
and (6) continuing drug and alcohol prevention awareness 
    The Committee expects an employer's drug-free workplace 
policy to be written in a clear manner using plain language and 
must be made available to every employee subject to drug 
testing in a manner consistent with established company 
personnel practice including, but not limited to, inclusion in 
personnel manual, handbook or posting in a place accessible to 
all employees. In addition, prospective employees must be 
informed of the drug-testing requirement. It is the Committee's 
expectation that a drug-free workplace program will emphasize 
the confidentiality of test results and the importance of 
maintaining the privacy of those tested consistent with the 
Substance Abuse and Mental Health Services Administration's 
(SAMHSA) Mandatory Guidelines (Federal Register, vol. 59, June 
9, 1994, page 29908).
    Drug testing conducted pursuant to Section 27 must be 
limited to the testing for the illegal presence of drugs and 
illegal drug use and may test for abuse of alcohol. It is 
expected that drug testing practices and procedures instituted 
pursuant to this demonstration program would follow well-
established procedures and standards which address questions on 
the collection of the specimen, the chain of custody, the 
security of the specimen, access of authorized personnel, 
privacy and confidentiality, integrity and identity of the 
specimens, and transportation to the laboratories.
    Such programs should rely on laboratories certified under 
the SAMHSA Mandatory Guidelines with subsequent changes if any, 
or approved by the College of American Pathologists (CAP) for 
forensic drug testing. Lists of such laboratories are readily 
available. The Committee understands there are over 100 such 
laboratories certified by SAMHSA and/or approved by CAP in the 
United States. While the laboratories certified by SAMHSA have 
been certified with respect to their ability to detect 5 drugs 
of abuse in urine, many of those labs are able to conduct 
testing on hair, sweat or saliva. Similarly, laboratories 
approved by CAP have been approved based on meeting standards 
in urine testing. Many of these labs also are able to conduct 
testing on hair, sweat, or saliva.
    In discussing the use of laboratories, the Committee does 
not want to discount the use of on-site testing kits if chosen 
as part of the drug testing program if all initial positives 
are sent for confirmation and every attempt is made to ensure 
the privacy of the individuals whose samples were sent for 
    The term ``medical review officer'' is defined in Section 
27(a) as a licensed physician with knowledge of substance abuse 
disorders. The medical review officer (MRO) plays a critical 
role in any drug testing program. This individual is 
responsible for reviewing and interpreting positive test 
results obtained through the business' testing program. The MRO 
offers an employee whose specimen tested positive, in both the 
initial and confirmatory test, an opportunity to provide a 
medical explanation in confidence of why the specimen tested 
positive before the result is shared with the employer. The MRO 
must have appropriate medical training to interpret and 
evaluate an individual's positive test result together with his 
or her medical history and any other relevant biomedical 
information. It is imperative that such an individual have no 
financial interest in the business that is conducting the 
testing program or in thelaboratory which performed the 
analysis, so there is no conflict of interest. By ``financial in the 
business,'' the Committee does not mean to eliminate those physicians 
who contract with a business to act as an MRO as part of the drug 
testing program. In response to concerns about employee privacy, 
language was included in the definition to prohibit the MRO from being 
an employee of the lab or small business.
    As part of the employer's drug-free workplace program, 
employees testing positive or coming forth for assistance must 
be provided a list of qualified professionals to assist in the 
evaluation, referral and resolution of their substance abuse 
problems. Such confidential consultation shall include 
provision of the names, address, and phone numbers for 
qualified providers of substance abuse evaluation, counseling 
and treatment. Similar to the Department of Transportation's 
drug testing regulations. SBA is not to require employers or 
intermediaries to cover the cost of intervention or treatment.
    Section 27(b) provides the authority for the SBA to provide 
the grants under the demonstration program. Section 27 provides 
important privacy protections for employees participating in 
drug-free workplace programs established pursuant to Section 
27. Consistent with the SAMHSA guidelines and responsible drug 
testing practices, employers establishing drug-free workplace 
programs under this Section are to incorporate procedures to 
ensure confidentiality of test results and of employee 
participation in employee assistance and other rehabilitation 
programs, including keeping such records separate from 
personnel records. Each program must include a prohibition 
against disclosure of medical information, including 
identification of prescription drugs taken, unless in response 
to an inquiry by the MRO following a confirmed positive drug 
test. Employees may want to record such information for their 
own personal use, but under no circumstances should that 
information be provided to the company, the collection site 
personnel, or otherwise associated with the chain of custody 
because it can bias the test as well as violate the privacy of 
the employee. Section 27 also describes the information to be 
contained in the MRO's written report, which must be prepared 
in a manner designed to ensure confidentiality of the 
information. The report only deals with final results that are 
positive for illegal drug use and the report will only address 
the illegal use with the MRO not disclosing any other 
information acquired during their investigation.
    Section 27(d) requires SBA, in conjunction with the 
Departments of Labor and Health and Human Services and the 
Office of National Drug Control Policy, to evaluate programs 
any drug-free workplace programs establish. Section 27(e) 
authorizes the SBA to contract with other government agencies 
or organizations or private organizations for the provision of 
services under this Act. This provision will allow the SBA to 
draw on the resources of other organizations in areas outside 
their technical competencies.
    Finally, Section 27(f) makes clear that mere participation 
in drug-free workplace training sessions or other informational 
programs does not require any employer to contract for any 
services offered as part of a drug-free workplace program, and 
Section 27(g) authorizes $10,000,000 to carry out this program. 
These funds are authorized over a two-year period, such that 
the total authorized for two years in $10,000,000, of which a 
total of no more than $1,000,000 may be used to implement 
assistance provided by the Small Business DevelopmentCenters 
under Section 21(c)(3)(T) of the Small Business Act.
    Section 5 amends Section 21(c)(3) of the Small Business Act 
to include among the various duties and responsibility of small 
business development centers providing information and 
assistance to small businesses seeking to implement drug-free 
workplace programs on or before October 1, 2000. Small 
businesses seeking assistance authorized under Section 5 are 
not mandated to implement drug-free workplace programs which 
meet the requirement of Section 27, but must have the option of 
implementing a drug-free workplace program without drug testing 
of employees. Employers seeking assistance from the small 
business development centers have greater discretion in 
selecting the components to include in their drug-free 
workplace program than those participating under Section 27, 
who must implement a program consistent with the definitions in 
Section 27(a).

                          III. Committee Vote

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following vote was recorded on September 15, 
    A motion by Senator Coverdell to adopt the substitute 
amendment to H.R. 3853, the Drug-Free Workplace Act, to promote 
drug-free workplace programs passed by unanimous voice vote.
    A motion to by Senator Coverdell to adopt H.R. 3853 as 
amended, the Drug-Free Workplace Act, was approved by a 
unanimous 18-0 recorded vote, with the following Senators 
voting in the affirmative: Bond, Kerry, Burns, Coverdell, 
Kempthorne, Bennett, Warner, Frist, Snowe, Faircloth, Enzi, 
Bumpers, Levin, Harkin, Lieberman, Wellstone, Cleland, and 

                           IV. Cost Estimate

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed below.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 18, 1998.
Hon. Christopher S. Bond,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3853, the Drug-
Free Workplace Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs, and Marc Nicole (for the state and local 
                                         June E. O'Neill, Director.

               congressional budget office cost estimate

H.R. 3853--Drug-Free Workplace Act of 1998

    Summary: H.R. 3853 would establish a drug-free workplace 
demonstration program and require that Small Business 
Development Centers (SBDCs) provide small businesses with 
information regarding drug-free workplace programs. The act 
would authorize the appropriation of $10 million to SBA for 
grants or contracts with not-for-profit organizations to 
provide small businesses with drug-free workplace programs. 
Assuming appropriation of the authorized amount, CBO estimates 
that implementing this legislation would cost $10 million over 
the 1999-2001 period.
    H.R. 3853 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply. H.R. 3853 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA). Any costs 
to state and local governments from enactment of the 
legislation would be incurred voluntarily.
    Estimated cost to the Federal Government: For the purposes 
of this estimate, CBO assumes H.R. 3853 will be enacted near 
the start of fiscal year 1999 and that the authorized amount 
will be appropriated for fiscal years 1999 and 2000. The 
estimated budgetary impact of H.R. 3853 is shown in the 
following table. The costs of this legislation fall within 
budget function 370 (commerce and housing credit).

                                                                 By fiscal years, in millions of dollars--
                                                              1999       2000       2001       2002       2003
                                        SPENDING SUBJECT TO APPROPRIATION
Authorization Level......................................          5          5          0          0          0
Estimated Outlays........................................          3          6          1          0          0

    Basis of estimate: H.R. 3853 would authorize appropriations 
totaling $10 million over fiscal years 1999 and 2000 for the 
drug-free workplace demonstration program and for SBA to 
provide information and assistance (through SBDCs) to help 
small businesses develop drug-free workplace programs. Based on 
information from SBA, CBO estimates that implementing H.R. 3853 
would cost $10 million over the 1999-2001 period.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 3853 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The legislation would expand the services that 
Small Business Development Centers are required to provide. 
SBDCs are operated solely or jointly by state and local 
governments and institutions of higher education. SBDCs are 
funded by the federal government, and requirements imposed on 
them are conditions of receiving federal assistance.
    Previous CBO estimate: On June 17, 1998, CBO transmitted an 
estimate for H.R. 3853, as ordered reported by the House 
Committee on Small Business on June 11, 1998. The House version 
also would authorize the appropriation of $10 million for the 
drug-free workplace demonstration program. In addition, it 
would direct SBA to study the effects of drug use in the 
workplace and require that SBDCs provide small businesses with 
information regarding drug-free workplace programs. As a 
result, CBO estimated that implementing the House version of 
H.R. 3853 would cost about $12 million over the 1999-2003 

                   V. Evaluation of Regulatory Impact

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation.

                    IV. Section-by-Section Analysis

Section 1

    Designates the bill as ``the Drug-Free Workplace Act of 

Section 2

    Details Congressional findings regarding the serious cost 
in health, safety and productivity that abuse of alcohol and 
drugs imposes on the economy and particularly, small business. 
This section also lays out the fundamental purpose of this 
bill--to aid working parents and the small businesses that 
employ them in combating the threat of substance abuse.

Section 3

    Expresses the sense of Congress that businesses should 
adopt drug-free workplace policies and that the States should 
encourage them in their efforts through tax and insurance 

Section 4

    Amends current law to authorize the Drug-Free Workplace 
Demonstration Program. The Administrator is authorized to offer 
grants on a competitive basis to eligible intermediary 
organizations to provide technical and financial assistance to 
small businesses for the purpose of establishing drug-free 
workplace programs.

Section 5

    Amends current law to include among the various duties and 
responsibility of small business development centers the 
provision of information and assistance to small businesses 
seeking to implement drug-free workplace programs on or before 
October 1, 2000.