In this study we examine the longitudinal effects of psychiatric and substance use disorders on employment, in an employed population. The sample included respondents to the National epidemiologic survey on alcohol related conditions (NESARC) who were employed at Wave 1 (N = 22,407). Bivariate and multivariable analyses were conducted examining the associations between 12-month and new onset 12-month psychiatric diagnoses at Wave 1 and employment status at Wave 2. Past year and new onset 12-month depression, 12-month bipolar, new onset 12-month drug abuse, and 12-month and new onset 12-month drug dependence were associated with a decreased odds of being employed at Wave 2. This study suggests that it would be beneficial for employers to support their employees in participating in mental health treatment. Additionally, understanding how psychiatric disorders influence employment over the life course might inform the development of preemptive interventions to treat mental health symptoms.