In Washington, opening and closing work counts as hours worked; check your state's overtime rules when totaling the week.
Key takeaways
- Record closing tasks before clocking out.
- Review actual weekly hours for overtime.
- Put extra closing wages through payroll.
- Keep timesheets, schedules, and closing checklists together.
The last customer leaves, and then someone counts the drawer, wipes the counters, restocks the shelves for the morning, checks the back door, and sets the alarm. The people doing this work often know the store best, and they are often the ones who stay past the scheduled end time. If the clock stops when the doors lock, you have a pay problem waiting to surface. This post walks through five checks that help owners and managers pay closing-time work correctly.
One caution first. Pay rules depend on your state, your industry, and how you classify each job. The rules quoted here come from Maryland, Washington, and the IRS, so treat them as examples and as a starting point. Before you change your payroll, confirm the rules with your state labor agency and your accountant.
1. Opening and closing count as hours worked
Start with the easiest check. Some state agencies say directly that opening and closing a business is work. Washington's Department of Labor and Industries puts it this way: "Hours worked includes opening and closing a business, required trainings, and meetings." ( Washington State Department of Labor and Industries, Minimum Wage) That is Washington's wording, and your state may write its rules differently. The idea behind it is practical, though. If you require a task as part of the job, the time it takes belongs on the clock.
Think about what your closing routine really includes. Counting the drawer is work. So is the walk through the back room, the cooler check, the trash taken out to the dumpster, the alarm code, and the note left for the morning crew. Each of these takes a few minutes, and a few minutes at the end of every shift adds up over a month. A closer who starts counting after the last customer leaves is on the job, even if the public part of the day is over. Use a cash drawer count sheet to organize the count.
Write the closing steps down. A checklist does two useful things. It shows you exactly what the close involves, and it shows you how long it takes when it is done right. If you have never timed your closing routine, time it for a week. You may find that a task you assumed took a few minutes takes much longer, or that the same task takes one closer far longer than another. Either way, you now know what to schedule and what to pay.
Do not let staff decide on their own whether closing work "counts." If a closer thinks the cleanup is optional, they will skip it or do it off the clock, and then the store is not ready for the morning. Tell staff in writing that every required closing step is paid time. Then the rule is clear to everyone.
A common mistake is treating the last task as a favor. Someone who stays to mop the floor after the schedule says they are done is often doing it because they want the store to look right. That effort is still work you asked for, or at least accepted. Washington's quoted rule includes closing work as hours worked.
2. Pay the real shift, not the scheduled one
A schedule is a plan, not a record. A posted evening shift often starts earlier, when someone unlocks the doors and counts the opening drawer, and it often ends later, when the closing count runs over. Pay is owed for the time the employee actually works, and the clock is where that time is recorded. Schedules help you plan coverage, but they should not decide what goes on the paycheck.
Set one clock rule and make it simple. Staff clock in before their first task, which may mean before the doors unlock, and clock out after their last task, which means after lock-up. If someone is still counting the drawer when the scheduled end time passes, the clock keeps running. Do not ask a closer to clock out and finish the count on their own, and do not say "we will fix it on the next check." Correct missed closing time promptly and explain the correction to staff.
Watch for the early-start problem too. Many owners let a manager unlock the store early and then clock in later, when the first staff member arrives. If the employee is working during that gap, the gap counts. The fix is simple: anyone who unlocks, starts the coffee, or takes the first delivery clocks in first.
Trainings and meetings follow the same logic. If you require a staff meeting after close on a Thursday, or a training on a Sunday morning before opening, Washington's rule quoted above treats that time as hours worked. Put it in the schedule as paid time, and count it toward the weekly total you use for overtime in the next section.
Late closes also need a plan. When a shift runs long because of a rush, a spill, or a cash count that will not balance, the employee should record the real end time and tell a manager. Do not punish the closer for the overrun. A good routine includes a way to call a manager for help, so that one hard night does not turn into hours nobody recorded.
3. Know when overtime starts
Overtime causes the most confusion because it is measured across the week, not the day. Maryland's Department of Labor states the usual rule this way: "Most employees must be paid 1.5 times their usual hourly rate for all hours worked over 40 per week." ( Maryland Department of Labor, Maryland Minimum Wage and Overtime Law) Notice the words "per week." The threshold is a weekly total, not a daily one, so a long closing shift and an early opening shift are added together with the rest of the week.
Here is how that plays out. Suppose an employee works five shifts of eight hours each, for 40 hours, and then closes the store on a sixth day for another two hours. Under the Maryland rule, those two extra hours are over the 40-hour weekly line, so they are paid at 1.5 times the employee's usual hourly rate. For most employees covered by that Maryland rule, multiply the usual hourly rate by 1.5 for overtime hours. The math is simple, but only if your timesheets show the total hours for the whole week.
Two parts of the Maryland quote are easy to miss. The first is the phrase "most employees." The page makes clear that there are exceptions, and it describes separate limits for certain other workplaces. Check special categories, but remember that federal law may require overtime after 40 hours even when Maryland law sets a higher threshold. The second is the phrase "usual hourly rate." The multiplier applies to the rate the employee normally earns. If an employee's pay includes other components, confirm how your state calculates the regular rate before you finalize the overtime line.
If your business operates in more than one state, or your staff work shifts across state lines, you need each state's rule. Washington's rule on opening and closing time is one example of a state-specific detail. Other states may differ on what counts as hours worked and on where overtime begins. Do not apply one state's overtime line to every location.
Set up a weekly hour report that runs every Monday. Total each person's hours from the previous week, including trainings, meetings, and closing tasks. Flag anyone at or near the overtime line: pay overtime already worked under the applicable rule, and adjust future schedules if needed. Reviewing the previous week's totals before payday helps catch missing closing hours.
Illustrative example: checking weekly hours
An illustrative weekly report shows 40 hours before closing tasks are added.
4. Withhold and report payroll taxes on every extra hour
Extra closing minutes are wages, and wages come with payroll taxes. The IRS's Employer's Tax Guide, Publication 15, sets out the basics for employers. It states: "The rate of social security tax on taxable wages is 6.2% each for the employer and employee." ( Internal Revenue Service, Publication 15 (2026), Employer's Tax Guide) The employer and the employee each pay that rate on the same wages.
The same publication gives two more rules you need. It states: "The social security wage base limit is $184,500." That means social security tax applies only to wages up to that limit in the year. It also states: "The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2025." And it adds: "There is no wage base limit for Medicare tax." Social security has an annual wage base limit; Medicare does not.
Here is how those rates work on extra closing wages. For an employee who is still under the social security wage base limit for the year, social security tax of 6.2% applies to the extra wages, and Medicare tax of 1.45% applies to them as well. The employee pays both shares, and the employer pays matching shares on the same wages. Once the employee passes the social security wage base limit, social security tax stops for the rest of the year, but Medicare tax keeps applying. This explanation leaves out income tax withholding and other deductions, which depend on each employee's own forms and situation.
Why does this matter for closing time? Closing minutes paid outside payroll, or in cash, are still wages, and the same taxes apply to them. If they are missing from payroll, the employee's year-end records will not match what they were actually paid, and your tax filings will be off. Put closing time through payroll like any other wage. A payroll provider or accountant can set this up so each check shows hours, rates, and deductions clearly.
Ask your payroll person to confirm that closing hours sit in the same pay category as the rest of the shift. Separate codes, such as one code for "closing" and another for "regular," are an easy way for totals to drift apart. A quick monthly check that compares hours from the time clock with hours in payroll will catch the drift early.
5. Keep records that show every minute
Records can help resolve closing-time pay disputes. If an employee says they stayed past closing and the timesheet shows only the posted end time, you need something better than memory to settle it. The good news is that a few habits make your records much stronger without much extra work.
Use a clock that records actual times. A time clock, app, or login system should capture the real clock-in and clock-out moments. Avoid estimated entries, where staff write down the time they think they worked. If you must allow manual entries, require a reason and a manager's initials for each one. Watch for edits that always move a time in one direction. A pattern like that is easy to notice and hard to explain.
Add the closing checklist to the record. A checklist with the closing start time and lock-up completion time, initialed by the closer, does not replace the clock. It does show what the closing included and its duration, and it gives you a second source if a time is ever questioned.
Keep a weekly summary for each employee. It should show hours worked by day, the total for the week, and a flag for any week over the overtime line that applies in your state. This report is your working tool for overtime, and it is your proof later if a question comes up.
Make it safe to report a long shift. Staff who stay late because a delivery came in or a customer needed help should feel comfortable recording the real time. If they feel pressure to show a shorter shift, your records will be wrong, and your exposure grows with each pay period.
Keep the records together. Store timesheets, schedules, and checklists in one place you can find. Ask your accountant which retention rules apply to your business and each type of record. Use the shop record retention guide to prepare your questions.
Put the five checks to work
Closing-time work is part of the job. When you pay for it correctly, you protect your staff, your records, and your business. The effort is small compared with the cost of a wage claim or an audit, and a closer who finishes the count without worry is a better one for it.
Today, pick one closing shift from last week and check it against the timesheet. Compare the posted end time, the clock-out time, and the closing checklist. If the real time was longer, pay the difference and fix the routine so it does not happen again. Then read your state labor agency's pages on hours worked and overtime. Maryland and Washington are examples here, not the rules for every store.
Questions about closing-time pay
Should staff clock out before counting the drawer?
Staff should clock out after their last closing task. Include the count when comparing the actual shift with the posted schedule.
Can a schedule change replace overtime already worked?
A future schedule change cannot replace payment for overtime already worked under the applicable rule. Use the weekly report to separate payroll corrections from future scheduling decisions.