Thank you for trying to help. Unfortunately your solution above does not work, primarily because the issue is not with the WC code itself, but with the payroll item "Workers Compensation" that is posting as an unbilled cost.  If I clear out the WC code on the paycheck, instead of posting a $ value to the Unbilled Cost report, it posts a $0.  So, clearly the problem is with the payroll item.  But, as you probably know, the payroll item is automatically set up by the WC Wizard tool, so when I go to edit the payroll item (to try to figure out why it is posting to unbilled cots) there really isn't much to look at/edit.  So I am stumped as to why ONLY this one payroll item is posting to the Unbilled Cost report.  My company preferences are all set up to NOT mark all time (and expense) entries as billable.  And, the billable checkbox in the timesheets is also no checked.  So I cannot figure out what is triggering the WC payroll item to post as unbilled.  

PS -  just FYI, you don't have to unlock the paycheck to edit a WC code (that is not a locked feature).  

So, I'm stumped... any other ideas from the team of experts out there?