Tag Archives: Reduce Costs

Is Workplace Drug Testing Really the Best Thing for Your Business?

Is Workplace Drug Testing Really the Best Thing for Your Business?

Is Workplace Drug Testing Really the Best Thing for Your Business?

Personal accountability is especially important in a small business to meet deadlines, satisfy clients, control budgets, and produce positive results. With fewer employees to run day-to-day operations, small-business owners rely even more on individual contributions than do larger corporations.

A small-business owner has two choices to ensure his company employs personally accountable and law-abiding individuals: (1) a system based on trust, or (2) a system based on test results.

Surprisingly, however, a system based on trust yields higher productivity and employee morale than one based on testing. Take, for example, drug testing in the workplace.

More than half of employers in the United States (57 percent) still conduct drug tests on job candidates, and many employers (36 percent) continue to conduct periodic drug tests on current employees, according to 2011 research by the Society for Human Resource Management1.

Because drug testing costs as much as $50 per candidate, small-business owners (99 or fewer employees) are less likely to conduct drug tests (39 percent) compared with owners of businesses employing 2,500 or more employees (71 percent), according to the same research.

However, in a study of 63 high-tech firms in the computer-equipment and data-processing industry, drug testing was found to reduce rather than enhance productivity, according to a report by the ACLU2. Firms with pre-employment drug testing scored 16 percent lower on productivity measures than firms with no drug testing in the workplace at all, according to the ACLU report.

Here are three more reasons to reconsider drug testing in the workplace:

  • Drug testing is expensive. According to an ACLU study, the federal government spent $11.7 million to find 153 drug users among almost 29,000 employees tested in 1990 – a cost of $77,000 per positive test2.
  • Drug testing is not completely accurate, as it is not a pure science. There is a chance that an employee will receive a false positive. This unfairly destroys the rapport between an employee – falsely accused of using drugs – and an employer – forever biased by the inaccurate results.
  • Drug testing does not catch drug users. Drug testing, especially when conducted exclusively during the hiring stages, doesn’t guarantee that you’ll identify a drug user.

“The vast majority [of workers who use drugs] undergo examinations only when they apply for a job, and they can pass by abstaining from drugs for a reasonable period before the test – or by using a variety of masking agents or devices that make their urine seem clean,” Reynolds Holding wrote for Time3.

If you want to improve productivity and decrease absenteeism in your workplace, you have other methods available for encouraging personal accountability at your company, including:

  • Encourage participation in substance abuse programs. Medical insurance often covers counseling and substance abuse programs. If you suspect that an employee has a problem with drugs or alcohol, promote a substance abuse program at the office. Small businesses are more like families. As such, raising awareness for insurance-covered counseling kindly allows employees to address issues confidentially and quietly, and it shows that your company supports healthy recovery and doesn’t just issue reprimands.
  • Conduct comprehensive reference checks. Instead of testing candidates for drugs, try conducting more comprehensive reference checks on your employees. Ask for three professional and three personal references.
  • Prepare a list of questions in advance that ask previous employers and personal references to honestly evaluate a candidate’s sense of personal accountability. (Of course, check with a lawyer ahead of time to ensure that you’re not violating any workplace discrimination laws.) Reference checks done correctly will identify more areas for potential problems or conflict than will a drug test.
  • Hire outside consultants to improve workplace efficiency. If there is a decrease in productivity at your business, it may have nothing to do with your employees at all. Hire an outside consultant to analyze your operations and bookkeeping.

Implementing more efficient workplace systems may be just what your business needs – as opposed to promoting a culture of mistrust – to increase morale, efficiency, and company profits.

For more information, visit:

1. Society for Human Resource Management: “SHRM Poll: Drug Testing Efficacy

2. American Civil Liberties Union: “Drug Testing: A Bad Investment

3. Time: “Whatever Happened to Drug Testing?”

Whom Should You Hire: A Contractor or a Full-Time Employee?

Whom should you hire?

When you find yourself overwhelmed with projects for your company, you may begin to consider hiring additional staff members. After all, making sure your team can handle the work is crucial if you are to meet deadlines and please clients with quality results. However, don’t be hasty in hiring a slew of full-time employees when the work may dry up tomorrow. Instead, consider hiring some contractors who can be kept on hand as the work ebbs and flows.

To determine whether full-time employees or temporary contractors would better suit your business needs, ask yourself these questions:

Will the work last?

If you’re working on a project that will involve an impressive workload for the next year or more, then it’s worth it to hire at least one more full-time employee. On the other hand, just because you have some more projects than usual this time of year doesn’t mean the work will last. You may end up going through the hassle of interviewing, training, and collecting paperwork for a new full-time worker, only to run out of work for him to do. To avoid wasting time and money on employees you don’t need, make sure the new work will be long-term.

Can you afford to pay for a full-time employee?

Contractors tend to have higher hourly rates than full-time workers for one reason: They don’t get the same benefits. Consider what you usually have to provide for staff members:
• Paid vacation
• Sick leave
• Health and life insurance
• 401(k) matching
• Workers’ compensation

Plus, you typically have to pay a portion of Medicare, Social Security, and unemployment taxes for each full-time staff member, Rhonda Abrams wrote in her USA Today article, “Should You Hire an Employee or Independent Contractor?”¹
Before you decide whether an employee or contractor would better fit your budget, add the benefit and tax costs to the salary you’d pay an employee, then compare the total to the simple hourly rate you’d pay a contractor.

Do you need help with a specialized project?

You may have no more work than usual, but you realize that your employees cannot handle the projects at hand. If you need some specialized skills for your current workload but do not foresee a long-term need for the specialized knowledge, you may benefit from hiring a contractor. For example, OPEN Forum writer Thursday Bram recommends hiring a contractor when you need a new website, because you’d likely only need a new site design once in the next few years. She sums up the matter by writing, “Contractors are generally one of the best options when you need a specialized skill set on a short-term basis.”²

Add the Overall Costs

Because contractors usually have higher hourly rates than full-time employees, you may benefit more from hiring a full-time employee if you need someone 40 hours per week. On the other hand, if you only need help around 20 hours per week, then a contractor is your best bet. If you end up needing more of the contractor’s time in the future, you can always find out if he is open to the idea of becoming full-time eventually. This can benefit both of you, offering some job stability and health insurance to your new employee, and saving you from paying the high hourly rates of the typical contractor.

For more information, visit:

1. “Should You Hire an Employee or Independent Contractor?
2. “Temps, VAs, Contractors, and Employees: Who Should You Hire?

The Small Business Authority cannot and does not give legal or tax advice and nothing contained in this article should be construed as such. Before taking any actions based on this or any other article published by The Small Business Authority, we strongly advise you to consult with an attorney and/or your tax professional.

Business Owners Speak About Health Care Law

Business Owners Discuss Health Care

In January 2011, the U.S. House of Representatives passed HR 2, the “Repealing the Job-Killing Health Care Law Act.” The goal of HR 2, which passed 245-189, is to repeal the Patient Protection and Affordable Care Act as well as the health-care aspects of the Health Care and Education and Reconciliation Act. As reported on C-SPAN, the vote was considered symbolic.

In January 2011, Sen. Jim DeMint, R-S.C., introduced legislation that would repeal the health care law. It was read twice and put on the Senate legislative calendar. In February 2011, Senate Republican Leader Mitch McConnell, R-Ky., tacked onto an aviation bill an amendment that would have repealed the health care law. The Senate voted down the amendment 51-47.

The Small Business Authority spoke with small-business owners about the health care law and how it will affect them. Here are five viewpoints.

Expecting Lower Costs
Daniel G. Hacker, owner of Hacker Jewelers, Designers & Goldsmiths Inc. in Tecumseh, Michigan, believes that the reform will actually reduce his costs.
“We have met every year with our insurance representatives for the last 20 years or so,” Hacker wrote in an email. “This annual meeting consists of deciding how much more we will pay for how much less insurance coverage. We have to ask ourselves, ‘What can we live without, and what do we have to have and face the fact that we need to find the extra money for?’”

Hacker also believes that “the added tax credit looks like it will significantly reduce the costs for providing these benefits for my employees.”

That said, he does feel that small business needs relief from one section of the health care reform law: the provision that companies file a Form 1099 on any corporate or non-corporate entity doing business with them, once the pay exceeds $600. The law already had companies collecting 1099s on non-corporate providers of goods or services.

Hacker wrote that this provision “will inundate a small business like the one my wife and I run with new paperwork.”

Lawmakers are making various efforts to repeal the health care law’s requirement that business owners file 1099 forms. In February, the Senate voted to remove the requirement. According to the House Committee on Ways and Means press office, the House has not yet dealt with the Senate’s amendment.
Additionally, the Committee on Ways and Means approved in February two legislative pieces that deal with repealing the requirement: HR 4 and HR 705. The House passed HR 4 on March 3.
Sen. Mike Johanns (R-Neb.) also recently introduced a bill similar to HR 705.

Adding Labels Will Add 14 Million Hours
In the interest of making Americans healthier, the law requires some small businesses to comply with new requirements. Some people estimate that it will increase costs.

The National Automatic Merchandising Association (NAMA), headquartered in Chicago, represents the vending machine industry, which for the first time must list nutrition facts in close proximity to each article of food or the button you press to select it, if that information is not easily visible on the product.
Section 4205 of the health care law sets the following standard for vending machine operators: “In general—in the case of an article of food sold from a vending machine that (aa) does not permit a prospective purchaser to examine the nutrition facts panel before purchasing the article or does not otherwise provide visible nutrition information at the point of purchase; and (bb) is operated by a person who is engaged in the business of owning or operating 20 or more vending machines; the vending machine operator shall provide a sign in close proximity to each article of food or the selection button that includes a clear and conspicuous statement disclosing the number of calories contained in the article.”
The Food and Drug Administration estimates that compliance will cost vending companies 14 million hours per year.
NAMA said that there is no way to estimate actual costs as the rules are still being formulated.

The FDA has to create regulations to implement the law by March 2011. The FDA is currently taking comments for the regulations.
Ned Monroe, 
senior vice president of government affairs 
for NAMA, said 
the organization submitted a comment to the FDA on potential costs, stating, “Our preferred method of disclosure would be to post one menu with calorie counts of all foods which are stocked in a bank of vending machines.
“If this menu disclosure solution is accepted, then it would require significantly less than 14 million hours per year which the FDA is estimating.”

If the FDA does not back down on the requirement, said Monroe in an email, it would cost the small businesses that make up NAMA $40,000 a year.

‘I Can Compete’
Richard Hayman, president and CEO of Maryland-based Just Moulding, wrote in an email:

“Politicians know nothing about small business. Whatever our expenses are, we simply raise our prices to cover them. In the end, the customer/consumer always pays. From my perspective, as long as my competitors are required to play by the same rules I am, the playing field is level and fair. I can compete. Quality health care is a right, not a privilege, in my book. … Congress would like the public to believe that the cost is coming out of the owner’s pocket, and that’s very misleading. What Congress wants the public to believe is that businesses pay taxes on gross revenue. Our taxes are computed on net profit after all expenses. Quite a difference.”

Won’t Hire
Chuck Blakeman, a Denver-based author, speaker, and founder of the
 Crankset Group, agrees with those who say the health care law will kill jobs. He has six full-time and three part-time employees, and he had planned to hire two more people in the coming three months.
“Our health care costs went up 22 percent in September and our provider said it was a direct result of the health care legislation,” he wrote in an email. “They said it will go up another 10-15 percent in February or March of this year. It was already expensive, and is now prohibitive. We either won’t hire or won’t offer health care going forward.”

Blakeman equates the rise in health care costs for his employees to a tax increase, but commented, “Our taxes going up 100 percent wouldn’t have created as much cost as this legislation already has.”

Sees Positive Impact
Ben Coleman’s company, OrigamiBonsai.org, does business internationally. He believes that health care reform will make U.S. businesses more competitive in international markets. He explained, “The Small Business Health Care Tax Credit, part of health care reform, will give small businesses what is, in effect, the same rates as big businesses. The bill for health insurance will come down for small businesses. That means we can quote lower prices to our customers, which in turn means we’ll win more bids, both nationally and internationally.”

In an email, he wrote that he believes “health care reform will positively impact the bottom line, making smaller businesses more profitable than ever before.”

“Specifically in my business, health care reform will add durability,” Coleman wrote. His is a one-man operation, and he is uninsured because his insurer dropped him after two operations in 2008, and other insurers have been unwilling to pick him up.
“If I have another health disaster, I will have to tap my business for cash to pay the bills, and my business will die in bankruptcy court,” he wrote. “The only people who aren’t for health care reform are people who don’t understand it.”