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Federal Contractors and Grantees

Many federal contractors and all federal grantees are required by law to establish and maintain a drug-free workplace policy.

The most important piece of legislation regulating federal contractors and grantees is the Drug-free Workplace Act of 1988. Under the act, a drug-free workplace policy is required for:

  • Any organization that receives a federal contract of $100,000 or more
  • Any organizations receiving a federal grant of any size

At a minimum, such organizations must:

  • Prepare and distribute a formal drug-free workplace policy statement. This statement should clearly prohibit the manufacture, use, and distribution of controlled substances in the workplace and spell out the specific consequences of violating this policy.
  • Establish a drug-free awareness program. This program should inform employees of the dangers of workplace substance use; review the requirements of the organization's drug-free workplace policy; and offer information about any counseling, rehabilitation, or employee assistance programs (EAPs) that may be available.
  • Ensure that all employees working on the federal contract understand their personal reporting obligations. Under the terms of the Drug-Free Workplace Act, an employee must notify the employer within five calendar days if he or she is convicted of a criminal drug violation.
  • Notify the federal contracting agency of any covered violation. Under the terms of the Drug-free Workplace Act, the employer has 10 days to report that a covered employee has been convicted of criminal drug violation.
  • Take direct action against an employee convicted of a workplace drug violation. This action may involve imposing a penalty or requiring the offender to participate in an appropriate rehabilitation or counseling program.
  • Maintain an ongoing good faith effort to meet all the requirements of the Drug-free Workplace Act throughout the life of the contract. Covered organizations must demonstrate their intentions and actions toward maintaining a drug-free workplace. Their failure to comply with terms of the Drug-Free Workplace Act may result in a variety of penalties, including suspension or termination of their grants/contracts and being prohibited from applying for future government funding.
Last Updated: 11/02/2015