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Drug-Free Workplace Program Brings Bottom-Line Benefits to Kaanapali Beach Hotel
Kaanapali Beach, Maui, Hawaii (November 30, 2004) - When employers tell Bob Dove that the cost of employee drug testing is too high, Dove, president and CEO of Hawaii Employers’ Mutual Insurance Company (HEMIC), the state’s largest workers compensation insurance underwriter, tells them, “You can’t afford not to have a drug-testing program.”
According to Congressional findings published in the Drug-Free Workplace Act of 1998, absenteeism is 66% higher among drug users; health benefit utilization is 300% higher; and 47% of workplace accidents are drug related.
“There’s no upside to employing a drug user,” says Dove.
Mike White, Kaanapali Beach Hotel general manager, agrees. In 1996, Kaanapali Beach became the first hotel in the state of Hawaii to adopt a comprehensive drug-free workplace program; mandatory drug-testing began the next year. Today, the hotel reports its annual cost for workers’ comp claims (based on a 5-year average) has been cut in half since the program started, dropping from nearly $172,000 per year to about $83,000 per year; its workers’ comp premiums now average $30,000 less per year – cost savings that directly improve the hotel’s bottom line.
In a recent comparison of its workers’ comp claims, the hotel also found that the average annual cost per claim has dropped 45.6%, from an average of $6,613 per claim during the pre-drug-testing years of 1992-1996 to an average of $3,599 per claim after the drug-testing program was put in place (1997-2003).
Not surprisingly, Kaanapali Beach Hotel’s accident rate has dropped by more than 44% since 1997, from an annual average of 5.2 accidents per 100 full-time-equivalent (FTE) employees during the five years prior to the program to an average of just 2.9 accidents for the years since testing began. During the same post-testing period, Hawaii’s hotel and lodging industry experienced an average of 8.5 accidents per 100 FTE, according to state Bureau of Labor statistics.
“When we launched the Drug-Free Workplace program we felt we had a responsibility to address the issue, starting in our own backyard,” White recalls. “Now, six years later, we have the data to show the significant positive financial impacts a comprehensive program can have on a company as well.”
White says the program costs his 300-employee company about $10,000 per year.
The program includes mandatory drug education for all employees, counseling, treatment and a full range of drug-testing options, including pre-employment, periodic, random and post-accident testing. (The hotel also adopted a zero tolerance alcohol policy in 1995, prohibiting drinking by employees at all company-sponsored events, on and off property. Employees also may not purchase alcohol on the hotel premises.)
“In a joint effort with the union, we were able to respond to the drug crisis by developing one of the most comprehensive drug policies in the state,” explains Wendy Munetake, director of human resources. “Our employees recognize the problems associated with drug use and they support our efforts to fight the war against drugs.”
The support of the hotel’s union leadership also was critical to the program’s success, according to White.
Hanalei Peters, the hotel’s union chair, says the program has helped improve the working atmosphere among employees.
“Although other union heads may not agree with a drug policy, I personally feel it’s a good thing,” Peters says. “It helps everyone on the job and at home to be more aware of their surroundings. Through the mandatory drug education classes, employees have learned that to choose a lifestyle with drugs is nothing but a downward fall.”
Sean Delatori, a groundskeeper with five years of service, also commends the hotel’s drug-free policy, “This is a good program because employees who test positive are forced to go through rehabilitation or leave. We’re able to rely on our co-workers coming to work,” he said. “Employees at my other job where there is no drug testing have said that we’re lucky to have drug testing.”
A hotel bell clerk with 36 years of service, Patti Balderas, adds, “Drug testing keeps everyone on their toes and helps to keep drug traffickers away. I feel it makes KBH a safer place for employees and guests.”
“Businesses have a great ability to make a difference in the community,” concludes White. “If they ignore the problem, they will have to face the reality that the cost of drug abuse in our communities ends up impacting their operations in many ways.”
More facts & figures: The high cost of substance abuse
A 2003 Survey on Drug Use and Health, conducted by the U.S. Department of Health and Human Services, found that of $19.4 million adults with substance dependence or abuse, 14.9 million – or 76.8% – were employed. The federal Drug Enforcement Agency estimates that on-the-job substance abusers cost American employers $100 billion per year.
“Nationwide, substance abusers will cost employers an average of $19,000 per person each year in losses associated with absenteeism, turnover, workers’ compensation and medical care,” according to Bob Dove of Hawaii Employers’ Mutual Insurance Company. “The statistics are chilling.”
According to HEMIC, substance abusers are:
More likely to be involved in workplace violence
3 to 4 times more likely to be involved in on-the-job accidents
5 times more likely to file a workers’ compensation claim
33% less productive
47% more likely to leave their job in the first year of employment
