It should come as no surprise that drug sponsors are very concerned with compliance. LifeSciHub Current Administrator Sheila Mahoney: “As a regulatory person at heart, I had thought a drug sponsor’s primary risk concerns were related to drug safety and efficacy. Only when I started LifeScihub, and began encountering drug sponsor HR and legal groups, did I realize that drug sponsors are truly terrified of HR related compliance issues. The result is a sprawling mass of inefficiency that prevents more widescale, truly strategic engagement with the independent workforce.”
The life sciences industry isn’t alone- all companies in all industries are struggling with this, as is the US Department of Labor. At the heart of the matter, known as “worker misclassification risk” are two things- who will pay for worker benefits, and who will pay worker taxes. Outside of the US the issue takes a different shape, but it is still problematic. Organizations continue to convulse, considering non FTEs as a last resort, far less important, strategic or preferred than full time employees. Then, to manage non-FTEs, organizations apply FTE-oriented frameworks and systems in an awkward, not-fit-for-purpose manner, all the while longing for the halcyon days of the mid 20th century, when everything was so much more simple, and all work issues with were solved with full time employees.
To address the issue of workforce innovation LifeSciHub participates in the Coalition for Workforce Innovation (CWI)- a cross-industry group of stakeholders working to modernize workforce-related policy at the US national level. A major y2022 accomplishment was to comment on the US Department of Labor’s Employee or Independent Contractor Classification Under the Fair Labor Standards Act (Docket No. WHD-2022-0003).The rule attempts to clarify how a worker is classified, to determine responsibility for benefits and taxes.
The problem, everyone on almost all sides of the issue agree, is that all policies of this nature, such as California’s controversial “AB5” are clear as mud, serving only to make the issue harder to deal with unfortunately. The diversity of US worker types and arrangements is too complex to accurately classify in simple terms.Hiring Entity ambiguity then prevents organizations from embracing workforce innovation as legal groups frantically scramble to avoid risk (real or imagined) at all costs. This is a big reason why, especially at large pharmaceutical companies, hiring decisions are made through giant staffing firms who become the “employer of record”, pay the worker by w2 (and take a huge percentage of the billable hour for doing so). This traditional approach is unappealing to independent experts, who would rather work at small start ups with few or no red tape hoops (and file their own taxes as the small businesses they are). Large pharma line functions are forced to utilize cheaper resources, who often times require months of training before being able to even start on a project.
LifeSciHub was honored to join the CWI membership in the DOL proposed rule Public Commenting process. LifeSciHub’s comments:
“LifeSciHub is a community of independent pharmaceutical research and development experts. According to our research, approximately 4% of the US pharmaceutical R&D workforce decouple from the corporate entity to become independently incorporated independent experts each year. This is due to two factors: after 10 or more years of experience, demand is high but promotions and other traditional corporate benefits are few; M&A activity is so rampant as to make the corporate career path less stable than independent incorporation. As small businesses, these experts all have multiple drug sponsor clients and assume the risk of their own utility rates. And yet, drug sponsor engagement with this incredibly valuable talent pool is severely impacted by fears of worker misclassification risk. In drug development, where talent shortages have a quantifiable impact on human lives and health, it is critical to help businesses embrace and strategically engage the independently incorporated small business workforce.”
The entire CWI membership comment, compiled on behalf of CWI by the law firm Seyfarth, can be found in Federal Register, link here: https://www.regulations.gov/comment/WHD-2022-0003-54040
As of the December 13, 2022 commenting deadline, the Department of Labor (DOL) has received over 12,000 comments. There is no set timeline as to next steps, which could be DOL’s issuance of a Final Rule. LifeSciHub will keep our Community posted!