FLSA Overtime Compliance Readiness Assessment

The Assessment

For each question, pick the answer that best describes your organization today and note its points. Add up your points as you go. Your total maps to a result band below.

1. 1

   How does your organization capture hours worked for hourly employees?

   Diagnoses the reliability of the primary time capture method and its vulnerability to unrecorded compensable time.

   • Employees self-report hours on paper timesheets or text messages with no verification.0 pts
   • Employees enter hours into a spreadsheet or basic digital form; supervisors review weekly.1 pt
   • Employees punch in and out on a shared PIN or badge clock, but some remote or field hours are still self-reported.2 pts
   • All employees punch using biometric, GPS-verified mobile or controlled kiosk devices; pre-shift, post-shift and remote work are captured automatically.3 pts
2. 2

   How frequently do payroll staff manually correct timesheets before closing a pay period?

   Measures the rate of manual intervention, which correlates with underpayment risk and audit exposure.

   • Corrections are needed for most employees every pay period.0 pts
   • Corrections are needed for roughly a quarter of timesheets each pay period.1 pt
   • Corrections are occasional and limited to a few edge cases per pay period.2 pts
   • Corrections are rare; the system flags exceptions automatically and most timesheets close without manual edits.3 pts
3. 3

   How does your organization calculate the regular rate of pay for overtime purposes?

   Diagnoses whether the regular rate computation includes all required non-discretionary remuneration before applying the 1.5x multiplier.

   • We multiply the employee's base hourly rate by 1.5 and do not adjust for other earnings.0 pts
   • We include some additional pay types (like shift differentials) but are unsure whether all non-discretionary bonuses and commissions are included.1 pt
   • We include shift differentials, non-discretionary bonuses and commissions in the regular rate calculation; our payroll system handles most of this automatically.2 pts
   • Our system automatically computes the regular rate by including all non-discretionary remuneration as required by FLSA section 207, and we audit the calculation quarterly.3 pts
4. 4

   How long does your organization retain payroll and time records?

   Assesses compliance with FLSA section 211(c) recordkeeping requirements and audit retrievability.

   • We are unsure how long records are kept, or records older than one year are difficult to locate.0 pts
   • We retain records for about two years, but retrieval requires searching multiple systems or physical files.1 pt
   • We retain records for three or more years in a centralized system, though retrieval may take several days.2 pts
   • We retain records for three or more years in a centralized, searchable system and can produce any employee's complete time and pay history within hours of a request.3 pts
5. 5

   How does your organization determine which employees are exempt from overtime?

   Diagnoses whether exemption classifications are documented and reviewed against current salary thresholds and duties tests.

   • Exemption status is assigned by job title or manager judgment with no written documentation of salary level or duties analysis.0 pts
   • Exemption status was documented at hire, but classifications have not been reviewed in over two years.1 pt
   • Exemption classifications are documented and reviewed whenever job duties change, but not on a regular schedule.2 pts
   • Exemption classifications are documented with salary threshold verification and duties test analysis, and are reviewed at least annually or whenever DOL updates the salary threshold.3 pts
6. 6

   How does your organization track and pay for pre-shift, post-shift and off-the-clock work?

   Assesses exposure to unrecorded compensable time, the most frequently litigated FLSA violation.

   • We do not have a formal process; employees are expected to clock in at shift start and out at shift end regardless of additional work.0 pts
   • We have a written policy requiring employees to report all time worked, but no system enforces or captures it automatically.1 pt
   • Our time system captures actual clock-in and clock-out times including early arrivals and late departures, but managers sometimes round or edit entries.2 pts
   • Our system captures all actual punch times, applies rounding rules consistently per written policy, logs all manager edits with timestamps and reasons, and flags anomalies for review.3 pts
7. 7

   How does your organization handle meal and rest break compliance?

   Diagnoses break tracking practices and exposure to meal and rest break violation claims under state and federal rules.

   • Break times are not tracked; we assume employees take their breaks.0 pts
   • Break times are scheduled but not recorded; compliance depends on supervisor observation.1 pt
   • Employees clock out and back in for meal breaks, but rest breaks are not tracked.2 pts
   • All meal and rest breaks are tracked in the time system with attestation prompts; missed or short breaks generate automatic alerts to supervisors.3 pts
8. 8

   How does approved time data reach your payroll system?

   Measures the gap between time approval and payroll processing, where manual re-entry introduces errors and underpayment risk.

   • Someone manually re-enters hours from timesheets or spreadsheets into the payroll system.0 pts
   • We export a file from the time system and import it into payroll, but field mapping requires manual review each pay period.1 pt
   • We use a file-based integration that maps fields automatically, but overtime calculations and pay codes require manual verification.2 pts
   • Approved hours, overtime, pay codes, departments and rate adjustments flow into payroll through a direct integration with no manual re-entry.3 pts
9. 9

   Does your organization maintain an audit trail for punch edits, timesheet approvals and payroll adjustments?

   Assesses the defensibility of records in a DOL investigation or litigation, where edit traceability determines burden of proof.

   • We do not track who edits timesheets or when changes are made.0 pts
   • Managers approve timesheets, but edits are not logged with the original value, the changed value, or the reason.1 pt
   • Edits are logged with timestamps and the name of the person who made the change, but the original value and reason are not always captured.2 pts
   • Every punch edit, approval, override and payroll adjustment is logged with the original value, new value, timestamp, editor identity and stated reason in a tamper-evident audit trail.3 pts
10. 10

    How does your organization apply overtime rules across different states, locations or union agreements?

    Diagnoses the complexity of overtime rule application and the risk of applying incorrect thresholds or calculation methods.

    • We apply a single overtime rule (e.g., federal 40-hour weekly threshold) to all employees regardless of state or agreement.0 pts
    • We are aware that different rules apply in different jurisdictions, but payroll staff manually adjust calculations when needed.1 pt
    • Our system has some state-specific overtime rules configured, but new locations or policy changes require manual setup that sometimes lags behind.2 pts
    • Our system enforces jurisdiction-specific overtime rules (daily, weekly, consecutive-day, union and custom thresholds) automatically per employee work location, and rule changes are reviewed on a set schedule.3 pts

Score Yourself

Add up the points from every answer. Your total falls between 0 and 30. Find your band below.

• 0 to 8 points

  High Exposure

  Your organization relies heavily on manual processes, informal policies and unverified time records for overtime compliance. Key gaps in time capture, regular rate calculation, recordkeeping and exemption documentation leave you unable to defend your pay practices in a DOL investigation or wage-and-hour dispute. The burden of proof shifts to you when records are incomplete or unretained.

  Next step: Conduct an immediate internal audit of your time capture, overtime calculation and recordkeeping practices, and consult employment counsel to prioritize the gaps with the highest litigation exposure.

• 9 to 15 points

  Developing Controls

  Your organization has begun to formalize time capture and payroll processes, but significant manual intervention remains. Some compliance dimensions are partially addressed while others have foundational gaps. Inconsistencies in regular rate computation, break tracking or audit trail completeness create moderate risk during a DOL investigation or employee dispute.

  Next step: Map the specific dimensions where your scores are lowest, then implement automated controls for those areas first, starting with time capture accuracy and audit trail completeness.

• 16 to 23 points

  Structured Compliance

  Your organization has reliable time capture, documented exemption classifications and automated payroll integrations for most of your workforce. Remaining gaps are likely in edge cases: multi-state rule application, break attestation, or regular rate adjustments for variable pay components. Your records would likely withstand a routine DOL inquiry, though a targeted audit on specific pay practices could surface issues.

  Schedule a quarterly review of your overtime calculation rules, exemption classifications and multi-jurisdiction configurations to close the remaining gaps before they surface during an audit or employee dispute.

What to Do Next

Your score reflects how well your current time capture and payroll practices would hold up in a DOL audit or wage-and-hour dispute. EasyClocking by WorkEasy Software publishes this assessment to help payroll leaders and HR directors identify specific compliance gaps before they become costly. If your result landed below Audit-Ready, consider reviewing the companion Wage-and-Hour Penalty Exposure Calculator to quantify your financial exposure, or explore how EasyClocking by WorkEasy Software captures every minute worked and delivers approved hours directly into payroll.

• Wage-and-Hour Penalty Exposure Calculator
• Worker Misclassification Risk Diagnostic
• Time-Tracking Accuracy Benchmark
• FLSA Overtime Compliance Readiness Assessment Companion Page