The federal Drug-Free Workplace Act applies to federal contractors whose organizations have contracts of $100,000 or more, is not for acquisition of commercial goods, and is performed in the U.S. It also applies to all organizations that are federal grantees and all individuals who receive a contract or grant from the federal government.

The Drug-Free Workplace Act does not apply to subcontractors or subgrantees. Affected employers must certify that they will provide a drug-free workplace. The law doesn’t require alcohol or drug testing, but testing is implicitly authorized as a means to maintain a drug-free workplace.

Conduct an audit of your company’s drug testing policies and procedures with the Employment Practices Self-Audit Workbook

Penalties for employer who don’t comply with the Drug-Free Workplace Act
According to the U.S. Department of Labor (DOL), if a covered employer does not comply with the requirements of the Drug-Free Workplace Act it can suffer stiff penalties including suspension of payments for the contract or grant, termination or suspension of the contract or grant, and violators may be prohibited from receiving another contract or grant for a specified period.

Employers whose companies fall under this category must have a policy prohibiting the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance in the workplace and specifying what actions will be taken in the event of violations.

If an employee is convicted of a drug crime that occurred in the employer’s workplace, the employer must take certain actions against the employee and notify the contracting or granting government agency. Failure to comply with these provisions or any of the Druf Free Workplace Act’s other requirements can result in serious consequences. If a contractor violates the above-stated requirements, its contract may be suspended or even terminated.

Additionally, if enough of a contractor’s employees have been convicted of criminal drug offenses for conduct occurring in the workplace, a federal agency can conclude that the contractor has failed to make a good-faith effort to provide a drug-free workplace and the same serious consequences of contract suspension or termination may follow.

To determine is a particular organization is subject to the Drug Free Workplace Act, the DOL has developed a Drug Free Workplace Advisor Tool that walks users through a series of questions to help them determine if they are subject to the law and what the requirements and penalties are.

Basic Training for Supervisors, easy-to-read guides for managers on employment law, including a guide on substance abuse

State drug-free workplace laws
Many states also laws regarding creating a drug- and alcohol-free workplace. These laws may have additional requirements and penalties beyond the federal law. Employers should check their state laws to ensure they are in compliance as well.

State by state comparison of 50 laws in 50 states, including workplace drug testing