Labor Distribution and Dilution

After a pay run is complete, payroll costs associated with time that originated in Time and Labor can be extracted from the payroll system and distributed across payable time entries. The updated time detail can then be published to other applications for additional processing.

Allocating costs back to payable time is labor distribution. Labor distribution is an optional feature of Time and Labor that you can select on the Pay System page. Select one of two options.

• Labor distribution only.

  This option enables you to allocate payroll costs back to the tasks for which payable time was originally reported, provided you defined the TRC as eligible for distribution. If you are not tracking time at the task level, costs are allocated to the TRCs to which time was reported.

• Labor distribution and dilution.

  If you select this option, the Dilution process is triggered automatically at the end of the Labor Distribution process. The system reallocates labor-distributed costs for a given day, so that payroll costs are evenly distributed over payable time entries for hourly TRCs flagged as eligible for dilution. If a time reporter is paid at different rates or—in the case of salaried workers—is not explicitly paid for overtime, Time and Labor can calculate an average hourly (diluted) amount and apply it evenly across all hours reported for the day.

Example: Effect of Labor Distribution With and Without Dilution

Assume the following time entries:

Date	Hours	TRC	Project
1 Feb	5	REG	A
1 Feb	4	REG	B
1 Feb	3	REG	C

Suppose the Time Administration process applies a rule that converts hours in excess of 8 per day to overtime. The results of the rule are shown as follows.

Date	Hours	TRC	Project
1 Feb	5	REG	A
1 Feb	3	REG	B
1 Feb	1	OT	B
1 Feb	3	OT	C

When you run the payroll process, it consolidates the entries resulting in 8 hours of regular time and 4 hours of overtime. Regular time is paid a rate of 10.00 USD per hour; overtime is paid a rate of 19.00 USD per hour. Payroll sends the costs back to Time and Labor, which distributes the costs across the payable time entries as follows:

Date	Hours	Rate	TRC	Project	Cost
1 Feb	5	10	REG	A	50
1 Feb	3	10	REG	B	30
1 Feb	1	19	OT	B	19
1 Feb	3	19	OT	C	57
TOTAL	12				156

The cost for project A is lower than the cost for project C, even though more hours were worked for project A. This is not equitable, given that the time reporter could have worked on the projects in any order.

The Labor Dilution process distributes costs more evenly. It divides the total cost of 156 by 12 (the total number of reported hours) to come up with a rate of 13. It then applies the same rate to all entries, as shown in the following table.

Date	Hours	Rate	TRC	Project	Diluted Cost
1 Feb	5	13	REG	A	65
1 Feb	3	13	REG	B	39
1 Feb	1	13	OT	B	13
1 Feb	3	13	OT	C	39
TOTAL	12				156

Now project A reflects a diluted cost that is proportionate to the number of hours worked.

Labor Distribution Rules

Labor distribution rules are:

• The Labor Distribution process allocates costs back to payable time entries according to the level of detail supported by the payroll system.

  The criteria that the payroll system uses to consolidate payable time entries determines the level of detail.

• When all TRCs participating in labor distribution are of the same type (amount, units, or hours), costs are allocated evenly, based on the reported values.

  When one or more TRCs are defined with an amount type, the Labor Distribution process:

  • Allocates the amounts that were originally reported back to TRCs with an amount type.

  • Allocates the remaining costs across TRCs with a type of hours or units.

• When payable time status is set to Closed and the associated reason code is Not Distributed (NDS), (that is, it will not be sent to a payroll system or will not participate in labor distribution), the estimated gross amount (Est_Gross) populates both the labor distribution amount field (Lbr_Dist_Amt) and the diluted labor distribution amount field (Diluted_Gross).

  In addition, the currency code (Currency_Cd) used to calculate estimated gross populates the currency code used for the labor-distributed and labor-diluted amounts (Currency_Cd2).

• Record-only adjustments are not sent to payroll for processing, thus they are not included in the Labor Distribution process.

  You can manually update the labor distribution and labor dilution amount through the Adjust Paid Time page.