Boobs is right. Its the employer who decides what action to take upon recieving the U/A result.
However, there are, at the very least, state labor laws that dictate how an employer handles a diluted test result. The laws state that a diluted sample is not a fail, and an employer cannot discharge an existing employee for providing samples that are too dilute. A retest must be given in such circumstances.
There are reasons why a law like this is in place, chief reason being that diluted samples don't always happen because a donor is trying to fool the test. This is especially true for those who work an 8 hr day outdoors, in which one must stay hydrated, particularly in the summer. In fact, its an OSHA requirement for construction sites to provide water kegs on the job and keep the workers hydrated.

In pre-employment situations though, one doesnt exactly share the same rights as those afforded to existing employees. Most employers will give an applicant two chances at providing a suitable sample, before moving on to the next applicant (without a word in many cases).