Labor Costing Rules

A labor costing rule determines how an employee is paid. Use the Manage Labor Costing Rules setup task to define labor costing rules. For example, you can define a labor costing rule for pay types such as exempt, nonexempt, uncompensated, compensated, and hourly.

When an employee charges time to a project, the application processes the labor hours according to the employee's labor costing rule. For example, if an employee's labor costing rule is Hourly, the employee is eligible for overtime pay. If the employee's labor costing rule is Exempt, the employee isn't eligible for overtime pay.

Following are the key components of a labor costing rule:

• Costing method

• Overtime labor costing multipliers

Costing Method

For labor costing rules with the Rates costing method, labor costs are calculated for entered hours using hourly cost rates.

Overtime Labor Costing Multipliers

If your employees enter overtime hours manually, you can assign cost multipliers to overtime expenditure types. When you use the Rates costing method, and a transaction is charged to an expenditure type that has an assigned multiplier, the application applies the multiplier as labor costs are calculated.

To calculate rates for overtime expenditure items, before you define labor costing rules, you must define an expenditure type with the Overtime expenditure type class.