A more thorough explanation:

Definition: Labor and materials, also known as time and materials, refers to a type of contract that some builders or repair people use to provide their services and get paid. Instead of a fixed price or a percentage of the costs, they charge for the time they spend working and the materials they use.

For example, if a homeowner hires a contractor to remodel their kitchen using a labor and materials contract, the contractor will charge for the hours they spend working on the project and the cost of the materials they use, such as cabinets, countertops, and flooring. The homeowner will pay for these expenses separately, rather than a lump sum.

In some states, if the person performing the work is not a licensed contractor, they are limited to labor and materials in any lawsuit for contract payment. This means they cannot receive a profit above the amount of labor and materials used. Consumers who choose to work with someone using a labor and materials contract should be cautious and keep track of receipts and actual labor hours worked to ensure they are not overcharged.