Subject to correction as it was quite some time back that I implemented a working solution to this and I simply looked at my completed entries to document this, here are  the specifics:

EXAMPLE DETAILS/PROCESS

In Chart of Accounts

create:

50000 COGS

50100 Direct Labor

50110 Direct labor - member 1

Create Service item:

Lists --> Item List / Item --> New

First:

5.1 Pro services

    Tick This services is used in assemblies or is performed by a subcontractor or partner

    Expense Account 50100

    Description of Sales Item e.g. Labor Hours

    Income Account (the income/revenue account tied to the customer)

Second:

Member's name as a subitem of 5.1 Pro services

    Tick This services is used in assemblies or is performed by a subcontractor or partner

    Cost (enter the hourly cost [if T&M possibly this is the same as Sales Price below])

    Expense Account 50110

    Description of Sales Item e.g. something more specific to this member's services.

    Sales Price (enter the hourly cost billed to the customer)

    Income Account (the income/revenue account tied to the customer)

Create Payroll item

Employees --> Manage Payroll Items --> View --> Edit Payroll Item List

(I get an error in the process if I try to create a new one, so I found pre loaded ones in the list and simply amended them)

Double click the selected item to be changed to open it.

Change the name to what you want and make sure it is not marked as inactive.

Next screen, select 50100 Direct Labor as the tracking account, and Finish.

Create employee

In Employee Center, Create New Employee.

Fill in all applicable info

On the Payroll Info tab, enter payroll schedule and an Earnings Item, e.g. Direct Labor Hourly, with the hourly rate that the Member earns (the cost, not what you charge the customer).

And add any other applicable items

Tick Time Data To Create Paychecks.

Entering time

Employees --> Enter Time and select Weekly Timesheet or Single Activity.

Select Customer Job

Select the service item - this is the 5.1 above.

This creates the entries that can then be selected when creating the invoice to send to your customer.

VERY IMPORTANT: TIME AND PAYROLL IS RUN WITH THE EMPLOYEE ENTITY - WHEN SUBSEQUENTLY WRITING A CHECK TO THAT PERSON, IT IS NOT PAID TO THAT EMPLOYEE ENTITY BUT TO AN OTHER NAMES ENTITY THAT YOU CREATE UNDER LISTS --> OTHER NAMES LIST.