A labor costing rule determines how an employee is paid. You define a labor costing rule for each pay type your business uses. For example, you can define a labor costing rule for pay types such as exempt, non–exempt, uncompensated, compensated, or hourly.

When an employee charges time to a project, Oracle Projects 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 is not eligible for overtime pay.

To define a labor costing rule:
1. In the Labor Costing Rules window, enter a unique rule name and select a costing method.
Costing methods determine how labor costs are calculated. The available options are:
Rates: When you select Rates, Oracle Projects calculates the labor costs for entered hours using hourly cost rates.
Extension: When you select Extension, labor costs are calculated by the labor costing extension. When using this option you are not required to maintain hourly cost rates in Oracle Projects.

2. If overtime hours are created by the overtime calculation extension, you can use the Defaults for Overtime Entry region to specify a default project and task for system generated expenditure items.

3. Enter the Effective Dates during which the labor costing rule is valid.

4. If your employees enter overtime hours manually, use the Overtime Cost Multipliers region to assign cost multipliers to overtime expenditure types. When a costing method of Rates is selected and a transaction is charged to an expenditure type that has an assigned multiplier, the multiplier is applied as labor costs are calculated.
Note: If the transaction is charged to an overtime task and a cost multiplier is assigned to the task, the task multiplier takes precedence over the expenditure type multiplier.
If overtime hours are derived using the overtime calculation extension, you can use the Overtime Cost Multipliers region to default expenditure types for system generated expenditure items.

5. Save your work.