TIGHT LABOR MARKET SHAKES UP WORKPLACE DRUG TESTING

Employment: Some firms are abandoning the requirement, but others are
expanding their efforts.

That little plastic cup with the temperature gauge on the side has become a
comforting talisman for employers anxious to drive away drug use.

For job seekers, the drug test is as commonplace a ritual as selecting the
perfect interview outfit or spell-checking the resume one more time.

Now the ultra-tight labor market and other pressures are testing the drug
test with distinct results: both less testing and more testing, depending
on where you look.

Some employers have quietly shelved the collection cup in the face of
intense competition for workers, constant cost-cutting initiatives and two
recent studies questioning the cost-effectiveness of workplace drug
testing. This reevaluation is concentrated in such worker-starved
industries as computer makers, Internet-related firms and even ski resorts.

But with unemployment at a 30-year trough, many low-wage manufacturers and
service businesses fear they are dredging the bottom of a shallow labor
pool and are recommitting to or even expanding their drug-screening programs.

In the last decade, drug testing has become so routine that most large
employers these days - the American Management Assn. says 70% - ask workers
for what the testing industry euphemistically calls a "donation," usually
of urine but sometimes of blood or hair. The most common test comes with a
job offer, but companies also test randomly, after an accident or because
of suspicious behavior.

Drug testing of employees and job candidates began to mushroom in the late
1980s as the U.S. government's war on drugs translated into, among other
things, federal regulations mandating testing in certain job categories,
such as railroad engineers and airline pilots.

Most private employers are not subject to these rules, but many nonetheless
have adopted drug-testing programs. Despite a steady stream of workplace
drug busts, such as the arrest of nearly 60 American Airlines employees
last August on smuggling charges, most employers can't point to a
particular problem. Rather, they have been won over by frequently cited
statistics about productivity losses and other on-the-job costs attributed
to drug abuse, or because others are doing it.

Courts have generally recognized employers' rights to test employees.

The American Civil Liberties Union long has opposed drug testing,
contending it violates the Constitution's protections against unreasonable
search and seizure. But the organization changed its tack in September and
released a controversial report saying that drug testing is a bad
investment and that previous cost studies are bad science.

Relying heavily on National Academy of Sciences research from 1994, the
ACLU white paper says drug testing does not pay off for employers in
decreased accidents, lower absenteeism or increased productivity. The
report contends that proponents of drug testing rely on "junk science" and
unsubstantiated claims.

"Employers think they're improving productivity and safety with urine
testing, and the truth is they're not," said Lewis Maltby, lead author of
the report and director of the ACLU's national task force on civil
liberties in the workplace. "In fact, drug testing may actually be
counterproductive."

In a recent study, two economics professor at Le Moyne College in Syracuse,
N.Y., looked at a sample of 63 computer equipment and software firms and
found that those firms with drug-testing programs had lower levels of
productivity than companies without testing.

"Drug testing, particularly without probable cause, seems to imply a lack
of trust and presumably could backfire if it leads to negative perceptions
about the company," Edward Shepard and Thomas Clifton wrote.

Indeed, concerns about drug screening are easily found in Silicon Valley
and other areas where high-technology firms are concentrated. Cisco
Systems, for example, does not test the 2,000 people it hires each quarter
because "it doesn't fit in with our trusting culture," said Steve Langdon,
a spokesman for the San Jose-based computer equipment maker, which employs
23,000 people worldwide.

High-tech employers are more likely to pass out signing bonuses and lava
lamps to new hires than they are to hand them a testing cup.

"The companies that have been testing are continuing to test, but nobody is
introducing it as a new feature," said Ron Mason, a principal in the Irvine
office of the Towers Perrin consulting firm. "Drug testing isn't even on
the radar screen. They're trying to find bodies and keep them at work."

Hesitating for even one day can cause a company to lose the competition for
a hot prospect, and so some companies are skipping not only the drug test,
but even such things as references and up-to-date resumes, said John
Sullivan, head of the Human Resource Management Program at San Francisco
State University.

"The war for talent is over and the employees have won," Sullivan said.
Even corporations with established drug-testing programs are playing along
by delaying drug tests to give workers a chance to clean up, he said.

But these companies are not hiring recklessly; instead, they are focusing
on performance and rewarding employees accordingly, Sullivan said.

"If you're recruiting good people who are already working, they're holding
down full-time jobs," Sullivan said. "If you're the star quarterback for
one team, I really don't need to do that much checking if I want you to be
the star quarterback for my team."

Several recent high-tech job-changers said they seldom faced drug testing
or, if they did, were given ample warning.

"Drug testing has never been an issue at any company I've worked for, even
when I was contracting in [the South] where more conservative viewpoints
generally prevailed," one programmer said. "Philosophically, I would have
to weigh the benefits of a position against any potential disregard for my
personal life."

Quipped a San Francisco-based Web site designer who has never been tested
for drug use, "I guess a drugged-out programmer is better than no
programmer at all."

Sometimes, policy and practice are at odds. At IBM, for example, the
official policy is to test all new employees - but it doesn't always happen
right away.

"My boss told me, 'You have to pee in a cup, so tell me how long you need,'
" said a recent hire at IBM, who had worked at the world's largest computer
maker for several months as an independent contractor. "He gave me plenty
of warning, and from what I hear, other big companies are doing the same
thing."

IBM spokeswoman Jana Weatherby denied that the Armonk, N.Y.-based company
has relaxed its drug-testing standards.

"It is a tight labor market, especially in this industry, but we're still
looking for the right people to come and work here and the parameters of
that have not changed," Weatherby said.

Corporations that do not routinely test workers or job applicants for drugs
are usually reluctant to discuss the matter.

"We don't want to promote ourselves to drug users," fretted Melba Spencer,
a spokeswoman for Bank of America, which doesn't screen new hires for drug
use but will test an employee if supervisors note suspicious behavior. "We
want a drug-free workplace and we'll do whatever we need to do to achieve
that."

For some, such as Bank of America, cost is the big issue.

NationsBank of Charlotte, N.C., had an established policy of testing new
employees. But under the influence of Bank of America, which was purchased
by NationsBank last year, the huge combined company adopted the San
Francisco bank's non-testing policy as well as its name. Bank of America,
the nation's No. 2 bank, employs more than 170,000 people.

"It was so remote that we would find anyone. It was just a fraction of a
number," Spencer said.

Bear Mountain Ski Resort in Big Bear Lake also was a pre-employment tester,
but gave it up a few years ago except for cause or after an accident.

"Of course, we have to provide a safe environment for our guests ... but we
employ 1,200 people on a seasonal basis, so you're processing a lot people
very rapidly," said Greg Ralph, director of marketing. "The costs
outweighed the benefits. There weren't many [drug-positive] employees."

Most companies that have adopted drug testing continue to support it
despite the controversial ACLU report. Some point to a study by the federal
Substance Abuse and Mental Health Services Administration, showing that
seven out of 10 people who use illegal drugs are employed full time.

"The typical drug user is not poor and unemployed," White House drug czar
Barry McCaffrey told reporters. "He or she can be a co-worker, a husband or
wife, a parent."

The report shows that about 6.3 million full-time workers age 18 to 49
admitted in 1997 that they had used illegal drugs in the preceding month.
Illicit drug users made up 7.7% of the full-time work force, a figure that
has changed little since 1992, according to the report.

Employment lawyer Robert J. Bekken called the ACLU report "a bunch of crap."

"This is so critical right now because of the labor shortage," the Newport
Beach-based lawyer said. "The people who are left out there - well, there's
a reason."

Bekken said many of his clients, particularly in manufacturing and service
industries, have seen more job candidates fail drug screens or criminal
background checks in the last several months. For some clients, the failure
rate is 50% or higher, he said.

"If you don't drug-test, you have no idea what it's going to cost you,"
Bekken said. "You never lower your standards or you'll bring in problems."

Tellabs, a leading maker of phone equipment, this year expanded its
drug-testing program to cover its last group of untested workers: summer
interns.

"Our philosophy is to try to do our very best to ensure our employees have
a safe work environment," said Linda Pfluger, human resources director for
the Lisle, Ill.-based firm. "We have standards at Tellabs and by God we're
going to stick with them."

But Pfluger acknowledged that Tellabs' competitors also test employees,
adding, "It would be difficult if Tellabs was the only employer who does
drug testing."

At Quest Diagnostics, the nation's largest independent processor of
workplace drug tests, "we're as busy as ever," said Ed Grady, vice
president of corporate health and wellness.

However, the tight labor market has made itself felt at the Teterboro,
N.J.-based company, which processes 10 million workplace drug tests a year,
Grady said. Instead of testing a broad applicant pool, employers are
waiting to test the finalists for a job - and they want the results in a
hurry.

"We're seeing increased pressure to get the results back as fast as
possible," Grady said.

Most employers never measure whether a drug-testing program is working
because the cost is relatively small, said Eric Greenberg, director of
research for the American Management Assn. Few can prove that their policy
is helping the bottom line, but most aren't troubled by that, he said.

"Drug testing has always been an intelligence test," Greenberg said. "What
you're really measuring is whether someone is smart enough and strong
enough to stay clean while they are conducting a job search."