DRUG TESTS ARE MULTIPLE CHOICE AT TECH FIRMS

Screening: Inconsistent Policies Focus Mostly On Blue-collar Workers, Rarely
On 'idea People,' And Sometimes None Of The Above.

Despite signs of increasing drug use among technology's newly rich,
high-tech companies are adopting policies that require screenings for
blue-collar and out-of-town staff, but protect programmers and executives in
tight labor markets such as Silicon Valley.

The little-known practice, which labor experts call legal but blatantly
biased, is being used by industry leaders such as online retailer Amazon.com
Inc., software maker Intuit Corp., Internet delivery service Kozmo.com and
chip maker Advanced Micro Devices.

Most companies say testing blue-collar factory workers and delivery people
is important because of safety concerns, while white-collar workers rarely
are in a position to endanger the public.

But critics say the policy is largely a reaction to the industry's cutthroat
competition for talent. Most high-tech companies in Northern California are
more likely to hand out signing bonuses than testing cups for their local
crews.

Intuit, for example, prescreens only its workers in Reno, Nev., including
their telephone help center staff, because there is "a high percentage of
drug use in that community," said spokeswoman Kim Paulson. Nevada and
California police and state officials scoffed at the reasoning, noting that
California is the methamphetamine production capital of the nation.

"It's discrimination, no question. But not all discrimination is illegal,"
said Alisa Chevalier, an attorney with Riordan & McKinzie who specializes in
management-side labor litigation. Still, she acknowledged that "it's going
to be a hard sell to employees."

At a time when computer-savvy workers are fought for and fawned over by
start-ups and giants alike, the divide between cubicle dwellers and their
manufacturing and service-oriented brethren has never been more clear.

Neither has the controversy about the merits of drug testing. The National
Institute of Drug Abuse puts the cost of drug-related lost productivity at
about $100 million annually.

The American Civil Liberties Union, however, released a report last year
claiming the numbers were inflated, as were often-quoted statistics showing
that drug users were more likely to be absent, have accidents and file
workers' compensation claims.

The tech industry's two-tiered system has sparked dissension in the ranks of
some companies, where human resource officials have acknowledged the
hypocrisy of not screening idea people when the economy is driven by fast
thinking.

While federal and state antidiscrimination statutes do not protect workers
based on their job title or location, the split policies could leave
companies vulnerable to union action, morale problems and other internal
turmoil, labor attorneys warn.

The biggest danger, say insiders, is that such policies are fostering a
laissez faire culture about illegal drugs. Like the early cocaine days of
the 1980s that swept through the top ranks of the investment banking
industry, the Internet boom has triggered a resurgence of drug use among the
"dot-com" young and wealthy.

A former Amazon.com employee, who spoke on condition of anonymity because of
legal constraints, said the company's decision to test workers at some
outlying distribution centers, but not at its Seattle headquarters, sparked
significant internal debate.

An Amazon spokeswoman said she had no knowledge of any internal debate but
that the company decided to test workers at six newer, more automated
distribution centers because of the physical dangers they face. "It's not a
black-and-white line between the distribution centers and the corporate
office," spokeswoman Patty Smith said. "It's part of making sure they are
safe. . . . We are not operating heavy machinery here [at company
headquarters]."

The former employee countered that, ultimately, "don't ask, don't tell" took
philosophical precedence. "People were afraid of what we'd find [in the
corporate offices]," she said. "Then we'd have to deal with it, and it would
be counter to the culture to do that."

Firms Avoid Drug Tests To Be 'Competitive'

Industrywide, the technology community has long shunned preemployment drug
testing, which became routine in corporate America in the aftermath of the
cocaine boom and the "war on drugs" years. IBM set a precedent in 1984 by
requiring tests. Intel followed after Congress passed the 1988 Drug Free
Workplace Act, which requires federal contractors and grant recipients to
provide drug-free workplaces.

Among the largest high-tech firms headquartered in Silicon Valley, only
Intel requires all employees--after receiving a job offer--to pass a
preemployment drug screen. The company instituted the policy in 1992 to
comply with federal regulations and to combat internal problems, said Tracy
Koon, Intel's director of corporate affairs.

"There were some issues with people working in the [manufacturing
facilities] at night, and we didn't want to isolate any single group of
workers," Koon said. "We make parts that are incredibly complex. When you
build a $2-billion [factory], it's not like you want a lot of people
tripping out in there."

Though the problem was focused on only one section of the global company,
Intel never considered screening only part of its work force because it
wouldn't have been fair, Koon said.

"We have bonuses across the board. We have vacations across the board," Koon
said. "We don't make distinctions between people in the back office and the
engineers" when it comes to workplace policies. That is a rare attitude in
the computer world. Pioneering executives, ranging from Apple Computer
Corp.'s Steve Jobs to Napster Inc.'s Shawn Fanning, envision themselves and
their staffs as rule-breakers who avoid all the strictures synonymous with
old-style corporate America. And there's nothing more old school than drug
testing.

Their reasons mix a culture of acceptance of alternative lifestyles with an
emphasis on productivity. Two economics professors at Le Moyne College in
Syracuse, N.Y., in 1999 looked at a sample of 63 computer equipment and
software firms and found that those with drug-testing programs had lower
levels of productivity than those that didn't.

Being productive has taken on a new sense of urgency among tech firms,
particularly after the stock market shake-up this spring and the recent
dot-com downturn. Good engineers and programmers have never been at a higher
premium, say Silicon Valley recruiters. And most of them don't want to be
tested.

"We were hearing that people were taken aback and offended by the process,"
said Wendy Miller, senior director of talent for Agilent Technologies Inc.,
a test and measurement equipment maker and one of the valley's top
employers.

Agilent--which ironically is a leading seller of drug-testing
equipment--stopped screening its new employees earlier this year. So did
Hewlett-Packard, Silicon Valley's largest employer, after concluding that
testing hurt its ability to compete for talent against rivals that did not.
Indeed, Microsoft Corp., Cisco Systems Inc. and Yahoo Inc. have never
implemented any sort of drug-testing policies.

"If they didn't see a need for it, it didn't make good business sense for us
to do it," said HP spokesman Dave Berman, adding that positive tests were a
rarity. "It really slowed down the recruitment process."

Nation's Labor Crunch Puts Pinch On Testing

Playing follow-the-leader, however, has created some seemingly odd, and
uncomfortable, situations for these global corporations.

AMD, for instance, began testing all 4,000 of its employees in Austin,
Texas, in the early 1990s "because everyone else there does it," said John
Greenagel, director of strategic communications for the Sunnyvale,
Calif.-based chip maker. "There's no question that the culture [in
California] is quite a bit different than Texas."

But is the local attitude about drug use different in Houston and Dallas,
where AMD has sales offices and does not prescreen its staff?

The distinction is clear to AMD officials, at least: Sales staffers are
categorized as California workers because of a payroll distinction, so they
"fit into California policies," said Edmund Crump, site director of human
resources for AMD's Texas operations.

Confused? You're not alone.

"It's totally insane, but everything about drug testing is insane," said
Lewis Maltby, president of the National Workrights Institute, a nonprofit
organization based in Princeton, N.J. "Corporations are sheep. They just
follow each other, even when they're being completely inconsistent."

A double standard in drug-testing policies has long existed in corporate
America, said Maltby. In the late 1970s and early '80s, companies targeted
blue-collar workers and those in a loosely defined category of
"safety-sensitive" jobs.

Then, the media began reporting on heavy drug use in the boardrooms and
offices of Fortune 500 companies, such as the infamous 1981 cover story by
Time magazine and its picture of a "freelance artist" in Manhattan doing
lines of cocaine on his lunch break. Bowing to criticism, executives began
joining factory workers in handing over urine samples.

"Companies used to do it because their leadership wanted to send a political
message. But let's face it: Ronald Reagan isn't in office anymore, and it's
not as emotional an issue," said John Sullivan, head of the Human Resources
Management Program at San Francisco State University.

Indeed, drug testing is on the wane nationwide, thanks in part to the tight
labor market led by the fast-growing tech industry. Companies that require
drug tests, either for prescreening or random screening purposes, have
fallen from 81% in 1996 to 66% this year, according to a survey by the
American Management Assn.

Drug screens are expensive, costing about $800 apiece if companies factor in
the test itself plus time expended, lost applicants and follow-up tests for
those who fail on the first try, Sullivan said.

That's a burden, especially for start-ups struggling with tight budgets.
Moreover, an increasing number of companies have concluded that the tests
have more symbolic value than practical use in keeping drug abusers out of
their ranks.

"Do you have less drug use [if you test]? I doubt it," Sullivan said. "I
jokingly call it the intelligence test because they tell you in advance.
People can stop using for a short time, and the minute they're hired,
they'll never be tested again. If you could drug-test every day, that would
be different."

Ultimately, rating employees by day-to-day performance is a more meaningful
way to weed out the troubled or troublesome, Sullivan said.

Selective Screens Test Workplace Boundaries

At some up-and-coming tech companies, drug testing and other human-resource
issues are an afterthought invented on the fly, which can lead to political
and public relations nightmares.

A revolt broke out in June at Kozmo.com when officials began requiring all
employees to sign a form authorizing the company to check for criminal
backgrounds, driving records, "modes of living" and credit histories. The
company's delivery and distribution workers were the first to receive the
paperwork.

More than a dozen employees in Seattle refused to sign the forms and the
company fired them, said Kozmo.com spokesman Matt Higgins. The company later
revised the form, removing the credit history language, and offered to
rehire the departed workers.

The form did not require anyone to submit to a drug test, Higgins said. In
the last few months, however, internal questions about public safety have
prompted the company to roll out a pilot program to drug-test new drivers
and distribution staff in New York City and Washington, D.C.

Kozmo.com does not plan to test anyone in its corporate headquarters in New
York and is still evaluating the preemployment screening program to see
whether it will roll it out in the other nine markets it serves, including
Los Angeles.

"The full range of HR policies could have been introduced at [the company's]
inception, but we lacked the resources to implement [them]," Higgins said.
"People understand [the drug-testing split] is a reasonable policy. The
issue [of the split] hasn't been raised thus far."

Legal experts note that while Kozmo.com's policy screens only certain
workers, it is still legal. Yet such human-resource quandaries highlight a
sober side to the great economic success stories of the 20th century, said
Maltby of the National Workrights Institute.

"I don't know how there could be legal action taken because only certain
classes of discrimination are illegal," Maltby said. "Nothing says companies
can't discriminate based on geography or class, or anything else that's not
gender or race" or other protected categories, such as age and disability.

Yet the technology industry has tested the boundaries of the workplace
before, igniting fierce battles pitting one group of workers against
another.

Contract employees sued Microsoft in 1992, alleging that the software giant
used an army of longtime "temporary" workers to augment its staff, denying
them stock and health benefits given to full-time employees.

A federal appeals court handed the temporary workers a partial victory last
year, ruling that as many as 10,000 temporary Microsoft workers must be
allowed to purchase company stock at a discount. The U.S. Supreme Court in
January upheld the lower court's ruling.

"There are a lot of problems with fast-growing companies, and this drug
testing is only one of them," said Brad Seligman, executive director of the
Berkeley-based nonprofit Impact Fund, which supports public interest
litigation. "They're so focused on their bottom lines that they're a
[human-resource] time bomb waiting to go off."