A large body of medical literature suggests that alcohol and illicit drug use adversely affect social, cognitive, and psychomotor functioning for many individuals. These adverse conditions are often linked to emotional and physical problems at home, in the classroom, and in the workplace. Recently, economists and other social scientists have begun to explore the labor market effects of substance use through statistical analyses of large national data sets and worksite-specific samples. Contrary to popular belief and earlier econometric studies, most of the current research is finding a positive or insignificant effect of substance use of earnings. However, other studies have found that substance use has a statistically significant effect on labor supply, absenteeism, retention, and various job performance measures. This paper critically reviews the literature on the effects of employee substance use on earnings and workplace behavior and discusses the significance of the findings for employers, policymakers, and public health practitioners.