Creating Labor Rate Groups

You can create labor rate groups based on pay code and position or based on pay code, position, and department. When you use pay code, position, and department, you create overhead groups and associate the overhead group with the labor rate group. Overhead groups are created in Service Management or Job Cost and are shared between the products.

You must mark the setup option in the Service Management Service Options window to use overhead amounts from Job Cost. See Choosing Service Options.

When you create labor rate groups, you are doing two things: establishing labor billing amounts and adding an overhead amount to the Microsoft Dynamics GP pay rate.

Labor rates are used to establish a billing amount for labor transactions. When you select a labor rate group in the Customer Maintenance or Location window, you establish the billing rate for labor at that specific location. Billing rates are set up to reflect different pay rates for regular time, overtime, or other premium rates. Billing rates also reflect different skill levels.

Labor rate groups are created during setup and saved to locations. You could create one labor rate group and apply it to all your locations. On the other end of the spectrum, you could create a unique labor rate group for each customer's location. You might have a combination of generic labor rates and specific rates based on customer.

Setting up labor rates can also involve applying overhead percentages and fixed amounts per labor rate. This results in the actual pay rate from Microsoft Dynamics GP Payroll plus an overhead burden charged against the service call as a labor cost. The amount billed for each labor cost transaction is calculated automatically.

For example, a technician may work three hours on a service call at $45 per hour. The billing rate of $135 would be calculated automatically for the customer's invoice. The pay rate per hour is $25 with overhead at 40%, plus fixed overhead at $10 per hour, resulting in a total cost per hour of $45. The total cost to the service invoice is $135.

All billing amounts automatically calculated by Service Management can be overridden at the time of invoicing.

To add a labor cost transaction for an employee, the employee must be set up in Service Management and Microsoft Dynamics GP. 

The positions and pay codes selected for each employee record must correspond to the labor rate group used to mark up the technician's labor.

Creating Labor Rates Based on Pay Code and Position

You create labor rates based on pay code and position using the Labor Rates window.

1. Select Microsoft Dynamics GP > Tools > Setup > Service Management > Invoice Setup > Labor Rates.
2. Complete the following fields.
   • Labor Rate Group Name
     Create a name for the labor rate group.
   • Position
     Use the lookup window to select the position to which this labor rate should apply.

   • Pay Code
     Pay codes are used to distinguish between labor rate groups with the same name and position. Each group may have multiple billing amounts (rates) for a combination of positions and pay codes. For example, a Preferred labor group may have an overtime rate and a regular time rate for technicians, supervisors, and helpers. 

     

     Position and pay code set up in Microsoft Dynamics GP must match the position and pay code in Service Management's labor rate group.

• Description
  Enter a description. For example, Supervisor - Regular or Supervisor - Overtime would differentiate one pay code from another.
• Fixed OH per Hour
  The fixed overhead per hour is a flat amount charged to recoup overhead costs such as union fringe benefits paid per hour. The amount appears in the Extended Cost + Overhead field of the Added Costs window for labor. It constitutes the overhead portion of the amount - the extended portion is the pay rate multiplied by the number of hours.
• OH Percentage
  The overhead percentage is a percentage charged to cover overhead costs, such as social security, workers compensation insurance, vehicle operating expenses, or unemployment taxes. Your overhead percentage may include general and administrative expenses that you may wish to apply as a percentage of labor cost. The OH Percentage field can contain up to five numbers. The amount appears in the Extended Cost + Overhead field of the Added Costs window for labor. It constitutes the overhead portion of the amount - the extended portion is the pay rate multiplied by the number of hours.
• Billing Amount
  The Billing Amount field shows the rate charged for the labor group name, specific position, and corresponding pay code. Leave the field blank to create a zero-dollar billing amount.

• Select Save to add the record to the scrolling window and add the labor group name to the Labor Rate Group Name lookup window.

Editing a Labor Rate Group

Double-click the labor rate group in the scrolling window. The text fields in the data entry area of the window fill in with the labor rate group information.

Deleting a Labor Rate Group

Double-click the labor rate group in the scrolling window and select Delete. This clears all the data entry fields except for the Labor Rate Group Name field and clears the record from the scrolling window.

Creating Labor Rates Based on Pay Code, Position, and Department

You can use overhead details and overhead groups for Service Management labor transactions. Overhead detail codes and overhead groups can be created from Job Cost or Service Management and are shared between the applications. Once overhead detail codes and overhead groups are created, they are used to create labor rate groups in Service Management. Labor rate groups are used to determine billing amounts and overhead amounts that are added to employees' pay rates in Service Management. For more information, see Setting up Job Cost Payroll Codes in the Job Cost User Manual.

You must mark the setup option in the Service Options window to use overhead amounts from Job Cost. Without marking this setup option, you will not see the Overhead Detail Code window or the Overhead Group Setup window as specified in the following steps. See Choosing Service Options.

Step 1: Create Overhead Detail Codes

Overhead detail codes define how overhead amounts are calculated based on payroll costs. You can recognize indirect labor costs, not typically set up as cost codes on an hourly or piecework basis, as overhead. These costs are added to posted amounts for the details and are not identified separately on customer invoices.

1. Select Microsoft Dynamics GP > Tools > Service Management > Invoice Setup > Labor Rates > Overhead Detail Code.
2. Complete the following fields, as necessary.
   • Overhead Code, Description
     Enter a name and description for the code.
   • Allocation Method
     From the drop-down list, assign a method of calculating overhead for the detail code. Enter an amount in one of the following fields, depending on the option you chose.
   • Fixed Portion
     Allows you to allocate overhead for payroll transactions on a cost-per-unit basis. For example, if you want to apply hourly overhead to account for the cost of travel to and from a job site, you could add $1.50 per hour (the unit of measure) with an overhead detail code.
   • Percent Portion
     Allows you to allocate overhead for payroll transactions on a percentage basis. For example, you can set up an overhead detail code for the cost of taxes incurred on an employee's pay rate, which adds 16 percent of the wages.
3. Select Save.

If you modify the overhead detail codes in the future, posted transactions will not be affected.

Step 2: Create Overhead Groups

Overhead group codes organize overhead detail codes logically per departments, positions, and pay codes. For example, you could set up detail codes for hourly compensation, overhead, and travel time. These details can be combined under a group code named Hour. The group code is applied to technicians assigned to the installation department.

1. Select Microsoft Dynamics GP > Tools > Service Management > Invoice Setup > Labor Rates > Overhead Group Setup.
2. Complete the following fields, as necessary.
   • Overhead Group, Description
     Use the Tab key to move from the name to the description.

   • Department, Position, Pay Code
     You can enter All in each of these fields. 

     

     Facilitating setup by using All
     Since the number of combinations of department, position, and pay code for a given overhead group code can become quite large, you can facilitate the setup by entering the word All in any of those fields. For example, if all departments, all positions, and all pay codes have a general overhead detail code, All could be used with each of those items. If a specific combination of department, position, and pay code has a unique detail code, that combination will be used along with any All combinations for the overhead group that match the same criteria. For example, if the administration department, CEO position, and salary pay code combination had a special bonus overhead detail code, and the All departments, CEO position, and All pay codes combination also had a bonus overhead detail code, both detail codes would be used.

   • Detail Code
     Use the lookup to select the detail code.
3. Select Save.

Overhead groups should be set up with different combinations of department, position, and pay code. For example, the combination of SRV, ENG, and HOUR should not appear in more than one overhead group.

Step 3: Create Labor Rate Groups

Labor rate groups are built using overhead groups created from Service Management or Job Cost. Use the Labor Rate Group Setup window to do this. You can also add a billing amount and description to each overhead group record.

1. Select Microsoft Dynamics GP > Tools > Service Management > Invoice Setup > Labor Rates > Labor Rate Group Setup.
2. Enter a new Labor Rate Group Name and select an Overhead Group.
3. Select the Default button. This will populate the scrolling window with individual records associated with the overhead group. Each of the records is a summary of one or more records for the same department, position, and pay code combination in the Overhead Group Setup window.
4. To add a Description and Billing Amount for a line item, double-click a row in the scrolling window. The Billing Amount field shows the rate charged for a department, position, and pay code. Leave the field blank to create a zero-dollar billing amount.
5. Save the new labor rate group by choosing Save.

To delete a labor rate group, double-click each record in the scrolling window and select Delete. When all records are deleted from the scrolling window, the labor rate group is automatically deleted. Select Clear to clear it from the window.