The Employment Relations Authority has ordered Carter Holt Harvey to pay the Engineering, Printing and Manufacturing Union $10,000.
The union said the company was penalised after it used the pretext of a random drug and alcohol test to deny access to one of its sites in Nelson to a local union organiser.
The union said Corey Wallace was asked to take the test while he was conducting a union meeting in a disused administration building.
They said he was then banned from the site after he refused to take the test.
The union's South Island director of organising Alan Clarence said there were no grounds for the test and Carter Holt Harvey was fined because of their misuse of power.
"Employers don't have that unfettered right to declare all of their workplace a safety sensitive area and subject to random drug testing, a safety sensitive area has to be justified."