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The employees of a mid-sized, north suburban manufacturing firm were rudely surprised recently. They showed up one morning and were given lie-detector tests. Their employer was convinced drug use was rampant.

A week later, the company pulled another shocker, demanding urine samples to discern traces of drugs. Combining the polygraph results and the urinalyses, it fired a dozen people.

The action highlights one of the nation`s most significant and rapidly-emerging workplace issues: drug testing of employees. No surprise, it is generating impassioned debate among employers, worker representatives and civil libertarians.

Some see testing as a justified management response to poor work performance, absenteeism, misconduct and industrial accidents. There are estimates that one of 10 workers is impaired at work by either drugs or alcohol, and that American industry may lose $40 billion to $60 billion a year due to drug-related absenteeism.

Others view testing as an insidious assault on privacy, aided by suspect technology, which can degrade workers and is destined to provoke substantial litigation.

What is undisputed is that testing is growing rapidly, touching blue-collar, white-collar and ”new-collar” workers, like health technicians, and may be the hottest workplace issue in years.

About 30 percent of the Fortune 500, including Ford Motor Co., Exxon and IBM, reportedly test job applicants, up from only 10 percent three or four years ago, while perhaps 20 percent of all employers engage in some testing of current employees.

”Testing is an epidemic and, unless intelligent restrictions are placed on it, employers will test at a drop of a hat,” said Sherman Carmell, a labor attorney.

”I`m seeing a surge of questions. It`s perhaps the hottest issue I`ve seen and I`ve been practicing for 44 years,” said Lee Burkey, a lawyer who represents unions and worries about invasions of privacy.

Chicago`s Seyfarth Shaw Fairweather & Geraldson, the nation`s largest management law firm, confronts a swell of similar queries, said partner R. Theodore Clark, who finds that employers have an ”increasing awareness that drug abuse has an adverse impact on productivity, theft and other issues.”

He`s convinced that employers` heightened sensitivity partly stems from the high-profile drug problems, mostly involving cocaine, of professional athletes and the publicity given to a recommendation by the President`s Commission on Organized Crime that workers be randomly tested.

Drug testing does not reflect a growing problem as much as a new awareness. Experts say the level of drug and alcohol abuse has not grown in the last 10 to 15 years, and alcohol abuse remains a far greater problem than drugs.

Most current drug testing involves job applicants and, many employers say, is merely one of many variables in the selection process. However, Ken Fox, a drug and alcohol specialist for Grant Hospital who counsels dozens of Chicago employers, said that 75 percent automatically eliminate any applicant who tests positive.

”By automatically dropping people, I think many employers . . . may well be losing a potentially valuable employee, especially since the drug tests may be dubious,” Fox said.

Testing of workers already on the payroll usually results either from specific accidents or ”fitness for duty” checks prompted by an employer`s suspicion that a person is exhibiting erratic, drug-related behavior.

Some mandatory, random testing of workforces does exist. Such testing has been legally challenged, and upheld, for some public sector employers, like the military, but there have been no court decisions on private sector random testing.

Many employers are loathe to admit random testing, Fox said, but it`s known that it takes place at some chemical, petroleum and nuclear power plants, where dangerous tasks are performed daily. Beside the military, testing also is done on civilian public safety workers, like police and firefighters, and in the transportation industry, including employees of some bus companies hired by the Chicago Board of Education.

Practically, private employers whose workers are not unionized have the greatest leeway in imposing tests. Their use of tests for pre-employment screening is virtually unfettered. Unionized firms must act more gingerly and bring the issue to the bargaining table, and more are doing so.

The State of Illinois called for random testing during bargaining this year with the American Federation of State, County and Municipal Employees

(AFSCME). According to Steven Culen, AFSCME`s Illinois director, the union balked, convinced that abuses of civil liberties loomed. The proposal was withdrawn.

But even unionized employers with testing plans, like the Chicago Transit Authority, encounter confusion. For example, the CTA has just been involved in two drug-related union grievances in which arbitrators made conflicting awards.

In each case, traces of cocaine were detected in blood or urine tests of a bus driver involved in an accident and a bus repairman. In neither case could one conclude when the cocaine was taken or if it was linked to impairment. The key issue became what was meant by a contract provision stating that ”drug use is forbidden.”

One arbitrator ruled that it meant only drug use while on duty and reversed the driver`s firing since there was no proof of such use. The other arbitrator upheld the dismissal of the repairman, maintaining that the provision bars drug use on or off duty.

Traditionally, nearly every company has a policy prohibiting the use or consumption of drugs and alcohol on company time or premises, as well as about the right to take disciplinary action if an employee arrived at work clearly under the influence.

But actual testing of large numbers of workers was too difficult and too costly until the early 1980s, said David Copus, a Washington-based partner of the Seyfarth law firm. Then, a far less expensive and easy-to-perform urine test was invented by the Syva Co. of Palo Alto, Calif.

The military quickly latched on to the new test, Copus said, and private employers followed. Of the armed services, the Navy has the most sophisticated and reliable program, said Dave Fretthold, manager of toxicology at the Central Pathology Regional Lab in Chicago.

But Fretthold underlined that even expensive drug tests are inexact. They reveal the presence of a drug in the urine or bloodstream, but do not tell when the drug was taken or if it caused impairment. With alcohol, on the other hand, there`s a legal definition linking a certain chemical level in the bloodstream to being ”under the influence.”

Civil libertarians contend the suspect technology only heightens the specter of testing.

Harvey Grossman, legal director of the Illinois branch of the American Civil Libeties Union, said, ”There is information in one`s bodily fluids that an employer doesn`t have the right to know.” The data include whether one is being chemically treated for depression or venereal disease, for example, and a urinalysis could prompt recriminations unrelated to work performance.

Douglas Nohlgren, a management attorney at Chicago`s Jenner & Block, acknowledged that it may be hypocritical for those corporate executives, who drink heavily, to test their workforces. ”But drug abuse remains a major problem as far as cost, impairment and lost productivity,” he said.

In what some suggest is a self-fulfilling prophecy, Nohlgren warned that an employer may have to get on the testing ”bandwagon” for sheer self-protection. ”If you become known as the only company in town which doesn`t test,” he said, the firm might wind up with a flood of drug and alcohol-abusing applicants.

Lawyers say employers must be prepared to answer such questions as: What actions should trigger a test? Do you test for all jobs or just high-risk ones? Is there a clear, written policy known to employees? What are the standards for disciplinary action? Is the mere trace of marijuana that might have been smoked a month earlier enough?