How does EERP know what labor rate to use when adding labor to a work order from payroll

How does EERP know what labor rate to use when adding labor to a work order from payroll?

• Enterprise Asset Management 

• EAM 

Informational 

When the setting Use Work Order billing rate for time entered in Payroll is enabled on the labor rate code EERP will override the payroll rate and utilize the defined work order rate