Employers who have knowledge of employee drug or alcohol abuse but do nothing to stop it have been held liable for third party claims arising out of the actions of employees under the influence of drugs or alcohol. On the other hand, private employers who do test for substance abuse also face certain risks. Prior to implementing a drug testing program, for example, the employer has a duty to negotiate with the employees' unions about the program. Union grievances and allegations of handicap discrimination under Federal and State law are possible outcomes of an employer's drug testing program, as are suits for wrongful discharge and defamation. The article concludes with a checklist for employers planning to implement a testing program. The checklist is designed to help employers avoid possible liabilities. 71 footnotes.