A client of mine is having a similar issue. According to this article, paychecks are not supposed to be showing in the Project Profitability report when Hourly Costs is the Labor Costing Method. However, my client says that it had changed recently and I can confirm that paychecks are now showing for projects even when changing to this method whereas before they were not. 

She has contacted support a couple times already and has been disconnected by one on chat and the 2nd one by phone couldn't even identify (understand) the issue nor show any existing case created from the first chat.