The most common way of accounting for this labor when the dollars are insignificant is to allocate the costs to "other direct costs" when the work is for a contract or as "indirect cost" when the work is for an indirect function. However, when these costs are significant, the direct costing allocation may be inappropriate. For example, if half the workforce at a contractor’s facility is contract labor while the other half are employees and all individuals work at the same place, then the normal practice of allocating overhead only on employees may greatly alter cost allocations to specific contracts when the ratio of purchased labor to employees is not uniform. The failure to allocate the workplace costs to both contractor employees and non-employees may be considered inequitable by the government.

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