South Dakota Remote Work Laws 2026
⚠️Informational only — not legal or tax advice.
Last Updated: December 2025
Applicable Period: 2026 tax year and current employment regulations
Key Characteristic: Employers with remote workers physically located in South Dakota
Table of Contents
Overview
General Characteristics of South Dakota Employment Law
South Dakota is generally considered business-friendly in its approach to employment regulation. According to official state sources, South Dakota has relatively minimal employment regulation compared to many other states.
Key Features (2025-2026):
- State minimum wage: $11.50/hour (2025), $11.85/hour (2026)
- Paid sick leave: Not mandated by state law
- State income tax: No state income tax
- Meal/rest breaks: Not mandated by state law for adults
- Overtime rules: Follows federal FLSA standards
- Workers’ compensation: Voluntary (not mandated by state law, though recommended)
- At-will employment: Yes
Sources:
South Dakota Department of Labor and Regulation – https://dlr.sd.gov/
Employment Laws Overview – https://dlr.sd.gov/employment_laws/default.aspx
Key Legal Framework
Official State Agency Information
South Dakota Department of Labor and Regulation
Division of Labor and Management
Contact Information:
- Website: https://dlr.sd.gov/
- Employment Laws: https://dlr.sd.gov/employment_laws/default.aspx
- Phone: (605) 773-3682
- Address: 123 W. Missouri Ave., Pierre, SD 57501
- Office Hours: Monday-Friday, 8:00 AM – 5:00 PM CST
The Department of Labor and Regulation administers employment laws in South Dakota. For official interpretations of state law, contact the Division of Labor and Management. For legal advice on how laws apply to specific situations, consult a licensed attorney.
Source: SD Department of Labor and Regulation – https://dlr.sd.gov/
Major Employment Law Principles
Employment-At-Will
According to South Dakota Codified Law (SDCL) 60-4-4, employment relationships in South Dakota may generally be terminated at will, meaning either party can end the relationship without specific cause, unless otherwise provided by statute or contract.
Statutory Citation: SDCL 60-4-4
Source: https://sdlegislature.gov/Statutes/Codified_Laws/2068266
General Exceptions (as stated in statute and guidance):
- Discrimination based on protected characteristics
- Retaliation for protected activities (e.g., workers’ compensation claims, jury service)
- Violation of public policy
- Breach of contract (express or implied)
- Smoking outside workplace during non-working hours (SDCL 60-4-11)
Specific applications of these exceptions depend on facts and circumstances. Consult legal counsel for guidance on termination matters.
Minimum Wage Law
South Dakota’s minimum wage provisions are found in SDCL Title 60, Chapter 11.
Statutory Citation: SDCL 60-11
Official Source: https://dlr.sd.gov/employment_laws/minimum_wage.aspx
General Framework: According to state law, South Dakota’s minimum wage is adjusted annually based on increases in the Consumer Price Index for the Midwest Region. The law provides that the minimum wage cannot decrease from year to year.
Application to Remote Work:
Minimum wage requirements generally apply based on where work is physically performed. Workers performing work from locations within South Dakota would typically be subject to South Dakota minimum wage requirements, regardless of employer location.
For specific situations, consult the South Dakota Department of Labor or employment counsel.
Anti-Discrimination Protections
The South Dakota Human Rights Act (SDCL Title 20, Chapter 13) prohibits discrimination in employment.
Statutory Citation: SDCL 20-13
Source: https://dlr.sd.gov/humanrights/
Protected Characteristics (from statute): According to state law, it is generally considered discriminatory or unfair practice to discriminate based on:
- Race
- Color
- Creed
- Religion
- Sex
- Ancestry
- Disability
- National origin
The statute also provides protections for tobacco use off the worksite during nonworking hours (SDCL 60-4-11), with certain exceptions.
Enforcement: South Dakota Division of Human Rights
Phone: (605) 773-4493
Website: https://dlr.sd.gov/humanrights/
For questions about specific situations, contact the Division of Human Rights or consult employment counsel.
Employee Classification Standards
Understanding Worker Classification in South Dakota
Worker classification determines whether an individual is an employee or independent contractor for various legal purposes. This determination has significant implications for tax obligations, benefit eligibility, and legal protections.
This section provides general background information only. Classification decisions should be made in consultation with:
- South Dakota Department of Labor and Regulation
- Employment attorney licensed in South Dakota
- Tax professional familiar with state and federal requirements
- IRS (for federal tax classification)
South Dakota’s Classification Approach
According to available information, South Dakota generally applies the Common Law Test for worker classification purposes, particularly for unemployment insurance and workers’ compensation matters.
Source: South Dakota Department of Labor; Federal guidance documents on state classification tests
Common Law Test Framework
The Common Law Test examines the relationship between the hiring entity and the worker, focusing on the degree of control exercised over the worker.
General Factors Considered:
According to IRS guidance and state practice, factors that may be relevant include:
Behavioral Control:
- Whether the hiring entity controls or has the right to control how the worker performs the work
- Whether instructions are provided about when, where, and how to work
- Whether training is provided by the hiring entity
- Whether evaluation systems measure details of how work is performed
Financial Control:
- Whether the worker has unreimbursed business expenses
- Whether the worker has made significant investment in facilities or equipment
- Whether the worker can realize profit or loss
- Whether services are available to the general market
- How the worker is paid (by hour, project, commission, etc.)
Relationship Factors:
- Whether there is a written contract describing the relationship
- Whether the business provides employee-type benefits
- The permanency of the relationship
- Whether the services performed are a key aspect of the hiring entity’s regular business
Important: No single factor is determinative. The relationship should be evaluated based on the totality of circumstances.
Illustrative Scenarios
The following scenarios are provided for general educational purposes only to illustrate how various factors might be considered. These are NOT classification determinations.
Scenario 1: Remote Software Developer
Facts: A software developer works exclusively for one company, receives detailed project specifications and deadlines, uses company-provided equipment and software, works set hours, receives comprehensive training on company systems, and is paid hourly.
General Observations: This scenario may share characteristics commonly associated with employee relationships, such as:
- Behavioral control (instructions, training, set hours)
- Financial control (company-provided tools, hourly payment)
- Relationship factors (exclusive arrangement, training provided)
However, actual classification depends on complete factual analysis and other relevant circumstances not described here. This is not a determination.
Scenario 2: Independent Marketing Consultant
Facts: A marketing consultant maintains their own business with multiple clients, provides services to various companies simultaneously, uses their own equipment and office space, sets their own schedule, charges project-based fees, markets services to the public, and carries business liability insurance.
General Observations: This scenario may share characteristics commonly associated with independent contractor relationships, such as:
- Limited behavioral control (consultant determines methods)
- Independent business operation (multiple clients, own equipment)
- Market availability (services available to others)
Actual classification requires comprehensive analysis of all circumstances and should be evaluated by appropriate authorities or legal counsel. This is not a determination.
Remote Work Considerations
For remote workers, classification analysis may involve additional considerations:
- Nature of supervision and oversight in virtual environment
- Control over work schedule and methods when working remotely
- Provision of equipment and technology
- Permanency and exclusivity of remote work arrangement
- Integration of remote worker into business operations
These factors do not change the legal tests but may affect how tests are applied. Classification of remote workers should be evaluated with professional guidance.
Consequences of Misclassification
According to various official sources, misclassification may result in:
For Employers:
- Potential unemployment insurance tax liability
- Possible workers’ compensation premium adjustments
- Potential wage and hour claim exposure
- Tax obligations at state and federal levels
- Possible penalties and interest
For Workers:
- May affect unemployment benefit eligibility
- May affect access to workers’ compensation coverage
- May affect wage and hour protections
- Tax implications
Actual consequences depend on many factors including severity, duration, and whether misclassification was intentional.
Source: South Dakota Department of Labor; IRS guidance
Resources for Classification Guidance
South Dakota Department of Labor and Regulation
Division of Labor and Management
Phone: (605) 773-3682
Website: https://dlr.sd.gov/employment_laws/
Internal Revenue Service
Form SS-8: Determination of Worker Status
Website: https://www.irs.gov/forms-pubs/about-form-ss-8
Professional Consultation:
- Employment attorney licensed in South Dakota
- Tax professional (CPA or Enrolled Agent)
- HR compliance consultant
Classification questions should be addressed through appropriate professional channels based on specific circumstances.
Minimum Wage Information
Current Minimum Wage Rates
According to the South Dakota Department of Labor and Regulation, minimum wage rates are adjusted annually based on the Consumer Price Index.
Official Rates:
| Effective Date | Non-Tipped Workers | Tipped Workers |
|---|---|---|
| January 1, 2025 | $11.50/hour | $5.75/hour |
| January 1, 2026 | $11.85/hour | $5.93/hour |
Source: SD Department of Labor and Regulation
https://dlr.sd.gov/employment_laws/minimum_wage.aspx
Annual Adjustment Method:
According to SDCL 60-11, the minimum wage increases at the same rate as the cost of living as measured by the Consumer Price Index published by the U.S. Department of Labor for the Midwest Region. The minimum wage cannot decrease, and increases are rounded to the nearest five cents.
Application to Remote Workers
General Principle:
Minimum wage typically applies based on where work is physically performed, not where the employer is located.
According to general legal principles:
- A worker performing work from a location in South Dakota would generally be subject to South Dakota minimum wage
- Employer’s location in another state generally does not change this requirement
- The higher of federal or state minimum wage applies
For multi-state situations:
When workers perform work in multiple states, specific allocation rules may apply. Employers should consult the South Dakota Department of Labor and legal counsel for guidance on particular circumstances.
Tipped Employee Provisions
According to South Dakota law, employers may pay tipped employees at the tipped minimum wage rate.
Requirements (from official guidance):
- Employer must ensure total compensation (wages plus tips) equals or exceeds standard minimum wage
- If tips are insufficient, employer must make up the difference
- Tip credit provisions apply
For specific compliance requirements regarding tip pooling, notification, and record-keeping, consult official Department of Labor guidance.
Source: https://dlr.sd.gov/employment_laws/minimum_wage.aspx
Exemptions and Special Provisions
According to South Dakota law and regulations, certain categories may be exempt or subject to different wage provisions:
Opportunity Wage:
Employers may pay workers under age 20 an “opportunity wage” of $4.25 per hour for their first 90 consecutive days of employment.
Other Potential Exemptions (from statute):
- Certain agricultural workers
- Specific executive, administrative, and professional employees (subject to federal FLSA standards)
- Outside salespersons
- Individuals with disabilities (under special certificate conditions)
Exemption claims should be verified with the Department of Labor and legal counsel, as exemptions are narrowly construed.
Comparison with Neighboring States (Reference Only)
| State | 2025 Rate | 2026 Rate | Notes |
|---|---|---|---|
| South Dakota | $11.50 | $11.85 | Annual CPI adjustment |
| Nebraska | $13.50 | TBD | Higher than SD |
| Minnesota | $11.13 | TBD | Large/small employer distinction |
| Iowa | $7.25 | $7.25 | Federal minimum wage |
| North Dakota | $7.25 | $7.25 | Federal minimum wage |
| Montana | $10.55 | TBD | Annual CPI adjustment |
| Wyoming | $5.15/$7.25 | $5.15/$7.25 | State/Federal rates |
This comparison is for general reference only. Each state’s laws apply based on where work is performed.
Sources: Various state Department of Labor websites; U.S. Department of Labor
Record-Keeping Requirements
According to federal FLSA and state guidance, employers should maintain:
- Hours worked by each employee
- Wages paid
- Pay rate information
- Dates of payment
- Other compensation records
Specific retention periods and requirements should be verified with the Department of Labor.
Resources for Current Information
South Dakota Department of Labor and Regulation
Employment Laws – Minimum Wage
Phone: (605) 773-3682
Website: https://dlr.sd.gov/employment_laws/minimum_wage.aspx
U.S. Department of Labor
Wage and Hour Division
Phone: 1-866-487-9243
Website: https://www.dol.gov/agencies/whd
Minimum wage compliance depends on numerous factors including employer size, employee type, work location, and exemption status.
Overtime and Break Requirements
A. Overtime Standards
Governing Framework:
South Dakota generally follows the federal Fair Labor Standards Act (FLSA) for overtime requirements. According to the Department of Labor, South Dakota has not enacted additional state-specific overtime standards beyond federal requirements.
Statutory Authority: Federal FLSA, 29 U.S.C. § 207
State Information: https://dlr.sd.gov/employment_laws/
General Overtime Threshold:
According to federal law:
- Overtime typically required after 40 hours in a workweek
- Rate generally required: 1.5 times the regular rate of pay
- No daily overtime requirement under federal or South Dakota law
Application to Remote Workers:
Overtime regulations generally apply to remote workers in the same manner as on-site workers, based on the nature of the work and exemption status rather than work location.
Source: U.S. Department of Labor – https://www.dol.gov/agencies/whd/overtime
Calculating Hours Worked
For overtime calculation purposes, “hours worked” may generally include:
- Time actually performing work duties
- Required meetings and training
- Time waiting to perform work (in certain circumstances)
- Other compensable activities depending on specific facts
Remote Work Considerations:
Determining compensable time for remote workers can involve complexities:
- After-hours email or message responses
- On-call time at home
- Time spent in virtual meetings outside regular hours
- Preparation time for remote work activities
These determinations are fact-specific. Employers should consult wage-hour counsel for guidance on tracking and compensating remote workers.
Source: Federal FLSA regulations; U.S. Department of Labor guidance
Overtime Exemptions
Certain employees may be exempt from overtime requirements under federal FLSA standards.
Common Exemptions:
To potentially qualify for exemption, employees generally must satisfy:
- Salary Basis Test: Paid a predetermined salary not subject to reduction based on quality or quantity of work
- Salary Level Test: Meets minimum salary threshold
- Duties Test: Performs exempt-level duties
2025-2026 Federal Salary Threshold:
According to federal regulations, the standard salary level for exemption is $684 per week ($35,568 annually) as of current guidance.
Note: Proposed changes to federal salary thresholds have been subject to legal challenges. Employers should verify current requirements with the U.S. Department of Labor.
Exempt Categories:
Common exemption categories include:
- Executive employees
- Administrative employees
- Professional employees (learned and creative)
- Computer employees
- Outside sales employees
Important: Job title alone does not determine exemption status. All three tests (salary basis, salary level, and duties) must be satisfied. Classification errors can result in significant liability.
Source: U.S. Department of Labor FLSA Regulations – https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime
For classification decisions, consult the U.S. Department of Labor, South Dakota Department of Labor, and legal counsel.
B. Meal and Rest Break Requirements
South Dakota’s Position:
According to the South Dakota Department of Labor, South Dakota does not have state laws requiring employers to provide meal or rest breaks for adult employees.
Official Guidance:
“South Dakota does not have a law that requires an employer to provide rest breaks or meal periods. This is a matter of employer policy.”
Source: SD Department of Labor – https://dlr.sd.gov/employment_laws/publications/what_need_know_laws.pdf
Federal Standards (If Breaks Are Provided):
While South Dakota does not mandate breaks, if an employer chooses to provide them, federal FLSA rules may apply:
Short Rest Breaks (5-20 minutes):
- Generally must be compensated as work time
- Cannot be deducted from hours worked
Meal Periods (30+ minutes):
- May be unpaid if:
- Employee is completely relieved of duties
- Employee is free to leave the work area
- Duration is at least 30 minutes
Application to Remote Workers:
If breaks are provided, the same federal principles apply. Employers may face challenges:
- Verifying breaks are actually taken
- Ensuring workers do not work during unpaid meal periods
- Documenting break compliance for remote staff
- Handling interruptions during home-based breaks
Employers may wish to implement clear policies regarding remote worker breaks in consultation with legal counsel.
Source: U.S. Department of Labor – https://www.dol.gov/agencies/whd/fact-sheets/22-flsa-hours-worked
Workers' Compensation Overview
Understanding South Dakota’s Approach
South Dakota’s workers’ compensation system is voluntary. According to state law, employers are not required to carry workers’ compensation insurance, though it is strongly recommended.
Why This Matters:
- Employers without coverage may face civil lawsuits for workplace injuries
- Coverage provides legal protection against negligence claims
- Many contracts and industries require proof of coverage despite voluntary nature
This section provides general background information. For specific coverage questions, consult the South Dakota Department of Labor and legal counsel.
Legal Framework
Statutory Authority: SDCL Title 62 (Workers’ Compensation)
Administering Agency: South Dakota Department of Labor and Regulation, Division of Labor and Management
Contact Information:
- Website: https://dlr.sd.gov/workers_compensation/
- Phone: (605) 773-3681
- Address: 123 W. Missouri Ave., Pierre, SD 57501
Coverage Verification:
Online tool available at https://dlr.sd.gov/workers_compensation/coverage.aspx
General Coverage Framework
According to South Dakota law, if an employer chooses to obtain workers’ compensation coverage:
Generally Covers:
- Medical expenses for work-related injuries and diseases
- Disability benefits for time away from work
- Death benefits for surviving dependents
- Vocational rehabilitation services
General Exclusions (from statute):
- Farm or agricultural laborers (unless working more than 20 hours/week for more than 6 weeks in any 13-week period)
- Domestic servants (same threshold as agricultural workers)
- Independent contractors who are certified as exempt
- Workfare participants
- Injuries due to willful misconduct, intoxication, or illegal drug use
Source: SDCL 62-1; SD Department of Labor guidance
Remote Worker Coverage Considerations
General Legal Standard:
Workers’ compensation typically covers injuries that “arise out of and in the course of employment.” Application to remote workers is fact-specific and depends on circumstances at time of injury.
Factors That May Be Considered:
According to general workers’ compensation principles and case law from various jurisdictions, factors that may be relevant include:
- Whether employee was engaged in work activity at time of injury
- Whether injury occurred in designated work area
- Whether injury occurred during work hours
- Whether activity was authorized or expected by employer
- Whether activity served employer’s business interests
- Employer’s knowledge of and authorization for home office setup
No single factor is determinative. Each claim is evaluated based on complete circumstances.
Illustrative Scenarios
The following scenarios are provided for general educational purposes ONLY. They do NOT constitute coverage determinations or predictions of claim outcomes.
Scenario Type: Work-Related Activities in Home Office
Example 1: Employee trips while walking from home office desk to retrieve work documents from file cabinet during work hours in designated home office space.
General Observations: This scenario may share characteristics with situations that could potentially be considered work-related, such as:
- Activity was work-related (retrieving work documents)
- Occurred in designated work area
- During work hours
- Movement was for employer’s benefit
However, compensability would require analysis of:
- Whether home office was formally established and authorized
- Employer’s knowledge and approval of setup
- Other specific circumstances
This is NOT a coverage determination. Actual determination would be made by insurer and potentially the Department of Labor based on complete facts.
Example 2: Employee develops carpal tunnel syndrome from extended computer use performing work duties over several months.
General Observations: Repetitive stress injuries from work activities may potentially be considered occupational diseases in some circumstances, but determination depends on:
- Medical documentation establishing work-relatedness
- Duration and intensity of exposure
- Whether condition arose from and during employment
- Other medical and factual evidence
Requires medical evaluation and official determination.
Scenario Type: Personal Activities at Home
Example 3: Employee injured while preparing personal meal in kitchen during unpaid lunch break.
General Observations: Personal comfort activities unrelated to work duties may be less likely to be considered work-related based on general principles. However, specific facts matter:
- Whether employee was completely relieved of duties
- Whether kitchen area is separate from work area
- Nature of the activity
- Other circumstances
This is NOT a coverage determination. Each claim is unique.
Example 4: Employee slips on stairs between home office and other areas of residence while going to restroom during work hours.
General Observations: Personal comfort activities may involve mixed considerations:
- Occurred during work hours
- But activity was personal necessity
- Location was within home but not work area
- May depend on employer’s premises control or knowledge
Outcomes would depend on complete factual analysis and official determination.
Critical Disclaimer:
These scenarios are purely illustrative and DO NOT constitute:
- Coverage determinations
- Legal advice
- Predictions of claim outcomes
- Recommendations for filing or not filing claims
- Exhaustive analysis of relevant factors
Every workers’ compensation situation is unique. Coverage determinations can only be made by:
- The workers’ compensation insurer (if coverage exists)
- The South Dakota Department of Labor and Regulation
- Courts (in contested matters)
For any injury or potential claim, consult the workers’ compensation carrier, the Department of Labor, and legal counsel.
Benefits Generally Available
According to South Dakota workers’ compensation statutes, benefits may include:
Medical Benefits:
- Reasonable and necessary medical treatment
- Hospital services
- Prescription medications
- Medical devices and equipment
Disability Benefits:
- Temporary Total Disability: Weekly benefits while completely unable to work
- Permanent Total Disability: Lifetime benefits with cost-of-living adjustments
- Permanent Partial Disability: Benefits based on impairment ratings
- Temporary Partial Disability: Benefits for reduced earning capacity
Death Benefits:
- Benefits for surviving spouse and dependents
- Funeral expenses (up to specified maximum)
- Educational benefits for dependent children (under certain conditions)
Vocational Services:
- Rehabilitation services
- Retraining assistance (if applicable)
Specific benefit amounts and eligibility depend on injury circumstances, wage history, and statutory formulas. Consult insurer or Department of Labor for specifics.
Source: SDCL 62-4, 62-7, 62-8; SD Department of Labor guidance
Reporting and Claim Process
According to South Dakota regulations:
For Employees:
- Report injury to employer promptly
- Seek medical attention as needed
- Follow employer’s claim procedures
For Employers (If Coverage Exists):
- Report injury to workers’ compensation insurer within 7 days of notification
- Complete First Report of Injury (Form 101)
- File online or mail to Division of Labor and Management
Late Reporting:
According to regulations, late employer filing may result in administrative fine of $500 payable to the Department of Labor and Regulation.
Source: SD Department of Labor – https://dlr.sd.gov/workers_compensation/
Best Practices for Remote Work
The following are general recommendations from various sources. They are not legal requirements and may not be suitable for all situations.
For Employers:
- Consider clear written policies on home office setups
- Consider providing ergonomic equipment or guidance
- Consider documenting remote work locations
- Consider safety training for remote workers
- Consider injury reporting procedures specific to remote work
For Employees:
- Consider setting up dedicated, safe work area
- Consider following any employer safety guidelines
- Consider reporting injuries promptly
- Consider documenting work area setup
- Consider maintaining clear work hour boundaries
Consult safety professionals and legal counsel for policy development.
Leave Entitlements
A. Paid Sick Leave
South Dakota’s Position:
According to the South Dakota Department of Labor, South Dakota does not have a state law requiring employers to provide paid sick leave to employees.
What This Means:
- Employers are not required by state law to provide paid sick leave
- Provision of paid sick leave is a matter of employer policy
- No state-mandated accrual or usage requirements
- Employers may choose to provide paid sick leave voluntarily
Source: SD Department of Labor – https://dlr.sd.gov/employment_laws/publications/what_need_know_laws.pdf
B. Family and Medical Leave
Federal FMLA:
The federal Family and Medical Leave Act (FMLA) may apply to certain employers and employees in South Dakota.
General FMLA Coverage:
- Employers with 50+ employees within 75-mile radius
- Employees who have worked 1,250 hours in past 12 months
- Employees employed for at least 12 months
FMLA Provides:
- Up to 12 weeks unpaid, job-protected leave for qualifying reasons
- Continuation of health benefits during leave
- Restoration to same or equivalent position
Qualifying Reasons:
- Birth or adoption of child
- Serious health condition of employee
- Care for family member with serious health condition
- Qualifying military exigency
- Care for covered service member (up to 26 weeks)
South Dakota State Law:
South Dakota has not enacted separate family or medical leave requirements beyond federal FMLA.
Source: U.S. Department of Labor – https://www.dol.gov/agencies/whd/fmla
For FMLA questions, contact the U.S. Department of Labor Wage and Hour Division or consult employment counsel.
C. Other Leave Protections
Jury Duty:
According to South Dakota law (SDCL 16-13-41.1), employers are prohibited from firing or demoting employees for serving as jurors. Time missed for jury duty may be with or without pay at employer’s discretion.
Voting Leave:
South Dakota law (SDCL 12-3-5) generally provides that employers must allow employees time off to vote if employee’s work schedule does not provide sufficient time outside working hours. Specific requirements apply.
Military Leave:
Federal Uniformed Services Employment and Reemployment Rights Act (USERRA) provides protections for military service members. South Dakota may have additional provisions.
Witness Leave:
Certain protections may exist for employees who are victims of crimes or witnesses in criminal proceedings.
For specific requirements and protections, consult the South Dakota Department of Labor and legal counsel.
Source: South Dakota Codified Laws; SD Department of Labor
D. Final Pay Requirements
According to South Dakota law:
Voluntary Resignation:
All wages must be paid on the next regular payday after an employee quits.
Involuntary Termination:
All wages and compensation earned are due on the next regular payday after the employee is terminated.
Withholding:
Law allows employer to withhold final paycheck until employee returns employer property, subject to legal limitations.
Source: SD Department of Labor – https://dlr.sd.gov/employment_laws/publications/what_need_know_laws.pdf
For specific situations, consult the Department of Labor or legal counsel.
Anti-Discrimination and Workplace Protections
South Dakota Human Rights Act
Statutory Authority: SDCL Title 20, Chapter 13
Enforcing Agency: South Dakota Division of Human Rights
Contact Information:
- Phone: (605) 773-4493
- Website: https://dlr.sd.gov/humanrights/
- Address: 123 W. Missouri Ave., Pierre, SD 57501
Protected Characteristics
According to the South Dakota Human Rights Act, it is generally considered discriminatory or unfair practice to discriminate in employment based on:
- Race
- Color
- Creed
- Religion
- Sex
- Ancestry
- Disability
- National origin
The Act applies to employers, employment agencies, and labor organizations.
Source: SDCL 20-13-10; SD Division of Human Rights
Application to Remote Work
Anti-discrimination protections generally apply to remote workers in the same manner as on-site workers. Prohibited discrimination includes:
- Hiring and recruitment
- Terms and conditions of employment
- Promotion and advancement
- Discipline and termination
- Compensation and benefits
Remote work status does not alter these protections.
Smoking Protection
South Dakota law (SDCL 60-4-11) provides that it is generally considered discriminatory or unfair practice to terminate employment based on an employee’s use of tobacco products off the worksite during nonworking hours.
Exceptions may apply when non-smoking requirement is important to specific job activities or necessary to avoid conflicts of interest with employer responsibilities.
Source: SDCL 60-4-11
Federal Protections
In addition to state law, federal anti-discrimination laws apply in South Dakota:
Title VII (Civil Rights Act):
- Prohibits discrimination based on race, color, religion, sex, national origin
- Applies to employers with 15+ employees
Americans with Disabilities Act (ADA):
- Prohibits discrimination based on disability
- Requires reasonable accommodations
- Applies to employers with 15+ employees
Age Discrimination in Employment Act (ADEA):
- Prohibits age discrimination (40+)
- Applies to employers with 20+ employees
Equal Pay Act:
- Requires equal pay for equal work regardless of sex
Pregnancy Discrimination Act:
- Prohibits discrimination based on pregnancy, childbirth, or related conditions
Source: U.S. Equal Employment Opportunity Commission – https://www.eeoc.gov/
Filing Complaints
State Discrimination Claims:
South Dakota Division of Human Rights
Phone: (605) 773-4493
Website: https://dlr.sd.gov/humanrights/
Federal Discrimination Claims:
U.S. Equal Employment Opportunity Commission (EEOC)
Phone: 1-800-669-4000
Website: https://www.eeoc.gov/
Complaints typically must be filed within specific timeframes. Consult agencies or legal counsel regarding deadlines.
Harassment and Hostile Work Environment
Harassment based on protected characteristics may constitute discrimination under state and federal law. This includes:
- Unwelcome conduct based on protected characteristics
- Conduct that creates intimidating, hostile, or offensive work environment
- Quid pro quo harassment
Employers should maintain policies prohibiting harassment and provide reporting mechanisms. Remote work environments are not exempt from these requirements.
Tax Information for Remote Work
A. South Dakota State Income Tax
Key Feature: South Dakota Has No State Income Tax
South Dakota does not impose a state income tax on individuals or businesses. According to official state information, this includes:
- No state income tax on wages and salaries
- No state income tax withholding requirements
- No state tax on investment income
- No state tax on business income
What This Means for Remote Workers:
- Workers living in South Dakota do not pay South Dakota state income tax
- Employers with employees in South Dakota do not withhold state income tax
- Workers may still owe federal income tax and taxes to other states
Source: South Dakota Department of Revenue – https://dor.sd.gov/
Multi-State Considerations:
Workers Living in South Dakota, Working for Out-of-State Employers:
According to general tax principles:
- No South Dakota state income tax applies (SD has no income tax)
- Federal income tax withholding still required
- Worker’s other state of connection may claim taxing rights
- Specific rules vary by state
Example Scenario:
A remote worker lives in South Dakota and works for a company based in Minnesota. Generally:
- No South Dakota state income tax (SD has no income tax)
- Federal income tax applies
- Minnesota may or may not claim taxing rights depending on where work is performed and Minnesota’s specific rules
- Worker should consult tax professional
Out-of-State Workers Performing Work in South Dakota:
If a worker physically performs work within South Dakota:
- No South Dakota state income tax (SD has no income tax)
- Federal income tax applies
- Worker’s home state may claim taxing rights
- Specific allocations depend on home state rules
These situations can be complex. Tax professionals should be consulted for multi-state scenarios.
B. Employment Taxes
Federal Employment Taxes:
All employers with employees must comply with federal employment tax requirements:
Federal Income Tax Withholding:
- Based on employee’s Form W-4
- Remitted to IRS
Social Security and Medicare (FICA):
- Social Security: 6.2% employee + 6.2% employer (2025-2026)
- Medicare: 1.45% employee + 1.45% employer
- Additional Medicare Tax: 0.9% on wages over threshold (employee only)
Federal Unemployment Tax (FUTA):
- Employer pays 6.0% on first $7,000 of wages
- Reduced by state unemployment tax credit
Source: Internal Revenue Service – https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes
South Dakota Unemployment Insurance:
Employers with employees in South Dakota must register for unemployment insurance with the South Dakota Department of Labor and Regulation.
General Coverage:
- Employers who paid wages of $1,500+ in a calendar quarter, or
- Employers who had one or more employees in each of 20 different weeks in a calendar year
Tax Rates (2025-2026):
- New employer rate: 1.02% of first $15,000 in wages
- Experienced employer rates: 0.00% to 9.45% based on experience rating
- Additional assessments: 0.01% Obligation Assessment + 0.10% Training Investment Assessment
Remote Workers:
Employers with remote workers physically working from South Dakota locations generally must register and pay South Dakota unemployment insurance taxes.
Source: SD Department of Labor and Regulation – https://dlr.sd.gov/
For registration and specific rate information, contact:
Unemployment Insurance Division
Phone: (605) 626-2452
C. Tax Nexus Considerations
Employment Tax Nexus:
According to general tax principles, having an employee physically working in South Dakota typically creates:
- Unemployment insurance nexus (registration required)
- Workers’ compensation considerations (if employer chooses coverage)
- Potential wage reporting obligations
No Income Tax Nexus:
Since South Dakota has no income tax, employers do not face state corporate income tax filing requirements based solely on employee presence.
Sales Tax Nexus:
South Dakota’s economic nexus law (post-Wayfair decision) provides:
- Remote sellers with $100,000+ in gross sales to South Dakota customers must collect and remit sales tax
- Physical presence (including employees) also creates nexus
- Registration with South Dakota Department of Revenue required
Note: Having a remote employee in South Dakota may create sales tax nexus if employer sells taxable goods or services.
Source: SD Department of Revenue – https://dor.sd.gov/businesses/taxes/sales-use-tax/
For sales tax questions:
Phone: (605) 773-3311
Email: DORBusinessTaxHelp@state.sd.us
D. Independent Contractors and Tax Reporting
Federal Tax Reporting:
Businesses paying $600+ to independent contractors in a calendar year generally must:
- Obtain Form W-9 from contractor
- Issue Form 1099-NEC by January 31
- File copies with IRS
State Reporting:
South Dakota does not require state-specific 1099 reporting (no state income tax).
Classification Matters:
Proper classification as employee vs. independent contractor has significant tax implications:
- Employees: Subject to withholding and employment taxes
- Independent contractors: Responsible for their own taxes
Misclassification can result in tax penalties. Consult tax professionals for classification decisions.
Source: IRS – https://www.irs.gov/forms-pubs/about-form-1099-misc
E. Deductions and Credits
Home Office Deduction:
Self-employed individuals may potentially deduct home office expenses if they meet IRS requirements:
- Exclusive and regular use for business
- Principal place of business
Employees generally cannot deduct unreimbursed employee expenses under current federal law (Tax Cuts and Jobs Act 2017-2025).
Other Business Deductions:
Self-employed individuals may deduct ordinary and necessary business expenses. Specific rules apply.
Credits:
Various federal tax credits may be available to businesses and individuals. Eligibility depends on specific circumstances.
Consult tax professionals for guidance on deductions and credits.
Source: IRS Publication 587 (Business Use of Your Home)
Resources
State Government Agencies
South Dakota Department of Labor and Regulation
Main Office:
123 W. Missouri Ave., Pierre, SD 57501
Phone: (605) 773-3101
Website: https://dlr.sd.gov/
Division of Labor and Management
Employment Laws and Standards
Phone: (605) 773-3682
Email: labor.management@state.sd.us
Website: https://dlr.sd.gov/employment_laws/
Unemployment Insurance Division
Phone: (605) 626-2452
Website: https://dlr.sd.gov/ra/
Workers’ Compensation Division
Phone: (605) 773-3681
Website: https://dlr.sd.gov/workers_compensation/
Division of Human Rights
Phone: (605) 773-4493
Website: https://dlr.sd.gov/humanrights/
South Dakota Department of Revenue
445 E. Capitol Ave., Pierre, SD 57501
Phone: (605) 773-3311
Business Tax Help: DORBusinessTaxHelp@state.sd.us
Website: https://dor.sd.gov/
Sales Tax Information:
Phone: (605) 773-3311
Website: https://dor.sd.gov/businesses/taxes/sales-use-tax/
Federal Government Agencies
U.S. Department of Labor
Wage and Hour Division
Phone: 1-866-487-9243
Website: https://www.dol.gov/agencies/whd
Regional Office (Chicago):
230 S. Dearborn Street, Room 412
Chicago, IL 60604
Phone: (312) 596-7180
Occupational Safety and Health Administration (OSHA)
Phone: 1-800-321-6742
Website: https://www.osha.gov/
Internal Revenue Service
Phone: 1-800-829-4933 (Business inquiries)
Website: https://www.irs.gov/businesses
Forms and Publications:
https://www.irs.gov/forms-instructions
U.S. Equal Employment Opportunity Commission (EEOC)
Phone: 1-800-669-4000
Website: https://www.eeoc.gov/
Milwaukee District Office (serves South Dakota):
310 W. Wisconsin Ave., Suite 800
Milwaukee, WI 53203
Phone: (414) 297-1111
Professional Referrals
Legal Assistance:
State Bar of South Dakota
Lawyer Referral Service
Phone: 1-800-952-2333
Website: https://www.statebarofsouthdakota.com/
For employment law matters, request referral to employment law attorney.
Tax Professional Assistance:
South Dakota Society of CPAs
Phone: (605) 692-7520
Website: https://www.sdcpa.org/
IRS Directory of Enrolled Agents:
https://www.irs.gov/tax-professionals/enrolled-agents
Additional Resources
Small Business Resources:
South Dakota Small Business Development Center
Phone: (605) 367-5757
Website: https://www.usd.edu/business/sbdc
SCORE South Dakota
Free mentoring for small businesses
Website: https://www.score.org/
Employment Law Publications:
South Dakota Department of Labor publishes various guides:
- “What You Need to Know About Labor and Employment Laws”
- “An Employee’s Guide to the SD Workers’ Compensation System”
Available at: https://dlr.sd.gov/employment_laws/publications/
Workplace Posters:
Required workplace posters available at:
https://dlr.sd.gov/employment_laws/poster_requirements.aspx
Federal posters available at:
https://www.dol.gov/general/topics/posters
Frequently Asked Questions
General Employment Questions
Q: Is South Dakota an at-will employment state?
According to South Dakota law (SDCL 60-4-4), employment relationships in South Dakota may generally be terminated at will, meaning either party can end the relationship without specific cause, unless otherwise provided by statute or contract. Certain exceptions apply, such as discrimination based on protected characteristics, retaliation for protected activities, and contractual provisions. For specific situations, consult legal counsel.
Q: Does South Dakota require written employment contracts?
South Dakota law does not generally require written employment contracts. Employment may be at-will without written agreement. However, written contracts may be advisable for certain situations and can alter the at-will relationship. Consult legal counsel regarding employment agreements.
Q: Can remote workers in South Dakota be classified as independent contractors?
Classification depends on the nature of the working relationship, not work location. South Dakota generally applies the Common Law Test examining factors such as behavioral control, financial control, and relationship characteristics. Proper classification has significant legal and tax implications. Consult the South Dakota Department of Labor, IRS, and legal counsel for classification decisions.
Wage and Hour Questions
Q: What is South Dakota’s minimum wage for 2026?
According to the South Dakota Department of Labor, the minimum wage for non-tipped employees is $11.85/hour effective January 1, 2026. For tipped employees, the rate is $5.93/hour (employer must ensure total compensation including tips equals at least standard minimum wage). Rates are adjusted annually based on Consumer Price Index.
Source: https://dlr.sd.gov/employment_laws/minimum_wage.aspx
Q: Are employers required to pay overtime in South Dakota?
South Dakota follows federal FLSA overtime requirements. Generally, non-exempt employees must receive 1.5 times their regular rate for hours worked over 40 in a workweek. Certain exemptions apply based on duties and salary level. For classification and compliance questions, consult the U.S. Department of Labor or legal counsel.
Q: Are meal breaks required in South Dakota?
No. According to the South Dakota Department of Labor, state law does not require employers to provide meal or rest breaks for adult employees. If breaks are provided, federal FLSA rules may apply (short breaks of 5-20 minutes are generally compensable; meal periods of 30+ minutes may be unpaid if employee is completely relieved of duties).
Source: https://dlr.sd.gov/employment_laws/publications/what_need_know_laws.pdf
Q: How often must employees be paid in South Dakota?
South Dakota law does not specify a particular pay frequency for private employers. Pay frequency may be established by employer policy or employment agreement. Federal law requires that employees be paid on regular, established paydays.
Tax Questions
Q: Do remote workers in South Dakota pay state income tax?
No. South Dakota does not have a state income tax. Workers living in South Dakota do not pay South Dakota state income tax on wages, regardless of employer location. Federal income tax still applies. Workers should consult tax professionals regarding potential tax obligations to other states.
Q: Does having a remote employee in South Dakota create tax nexus?
Having an employee physically working in South Dakota generally creates:
- Unemployment insurance nexus (registration required)
- Potential sales tax nexus (if selling taxable goods/services)
- No income tax nexus (SD has no income tax)
Employers should consult the South Dakota Department of Labor and Department of Revenue regarding registration requirements. For multi-state tax questions, consult tax professionals.
Q: Do employers withhold state income tax for South Dakota employees?
No. South Dakota has no state income tax, so there is no state income tax withholding. Employers must still withhold federal income tax, Social Security, and Medicare taxes. Employers must also pay South Dakota unemployment insurance taxes.
Leave and Benefits Questions
Q: Is paid sick leave required in South Dakota?
No. South Dakota does not have a law requiring employers to provide paid sick leave. Provision of paid sick leave is a matter of employer policy. Some employers may be covered by federal FMLA for unpaid leave. Consult the U.S. Department of Labor regarding FMLA requirements.
Q: Does South Dakota have family leave requirements?
South Dakota has not enacted state family leave requirements beyond federal FMLA. Covered employers (50+ employees) must comply with federal FMLA provisions. For FMLA questions, contact the U.S. Department of Labor.
Source: https://www.dol.gov/agencies/whd/fmla
Q: Are employers required to provide health insurance in South Dakota?
South Dakota law does not generally require employers to provide health insurance. The federal Affordable Care Act (ACA) requires applicable large employers (50+ full-time equivalent employees) to offer minimum essential coverage or potentially pay penalties. For ACA questions, consult tax professionals or visit https://www.healthcare.gov/
Workers’ Compensation Questions
Q: Is workers’ compensation insurance required in South Dakota?
No. Workers’ compensation insurance is voluntary in South Dakota (not required by law). However, it is strongly recommended as employers without coverage may face civil lawsuits for workplace injuries. Many contracts and industries require proof of coverage. For guidance, contact the South Dakota Department of Labor Workers’ Compensation Division at (605) 773-3681.
Source: https://dlr.sd.gov/workers_compensation/
Q: Are remote workers covered by workers’ compensation?
If an employer has workers’ compensation coverage, whether remote workers are covered depends on whether injuries “arise out of and in the course of employment.” This determination is fact-specific and depends on circumstances at time of injury. For coverage questions on specific situations, consult your workers’ compensation carrier, the South Dakota Department of Labor, and legal counsel.
Q: What should I do if injured while working remotely?
If you have a work-related injury:
- Report injury to employer promptly
- Seek medical attention as needed
- Follow employer’s claim procedures
- If employer has workers’ compensation coverage, claim will be processed through carrier
- Consult the South Dakota Department of Labor if questions arise
For specific situations, contact workers’ compensation carrier or the Department of Labor.
Discrimination and Workplace Rights Questions
Q: What types of discrimination are prohibited in South Dakota?
The South Dakota Human Rights Act prohibits employment discrimination based on race, color, creed, religion, sex, ancestry, disability, and national origin. Federal laws provide additional protections including age (40+), pregnancy, and genetic information. For discrimination concerns, contact the South Dakota Division of Human Rights at (605) 773-4493 or the EEOC at 1-800-669-4000.
Q: Can I be fired for smoking in South Dakota?
South Dakota law (SDCL 60-4-11) generally prohibits terminating employees for use of tobacco products off the worksite during nonworking hours. Exceptions may apply for specific job activities or conflicts of interest. For specific situations, consult legal counsel.
Q: Are there protections for jury duty in South Dakota?
Yes. South Dakota law prohibits employers from firing or demoting employees for serving as jurors. Time missed for jury duty may be with or without pay at employer’s discretion. For questions, contact the South Dakota Department of Labor or legal counsel.
Remote Work Specific Questions
Q: Do remote work laws differ from on-site employment laws?
Generally, employment laws apply to remote workers in the same manner as on-site workers. The key factor is typically where work is physically performed, not work location type. Specific applications may vary. For remote work compliance questions, consult the South Dakota Department of Labor and legal counsel.
Q: Can employers monitor remote workers?
Employee monitoring laws vary by jurisdiction and circumstance. Employers should:
- Review applicable federal and state laws
- Consider notice requirements
- Implement clear policies
- Consult legal counsel before implementing monitoring
For specific situations, consult privacy and employment counsel.
Q: Can employers require remote workers to return to office?
Generally, absent a contract provision or other legal obligation, employers may change work location requirements. However, considerations may include:
- Employment contracts or policies
- ADA reasonable accommodation obligations
- Practical and notice considerations
For specific situations, consult legal counsel.
Getting More Help
Q: Where can I get personalized legal advice?
For legal advice on specific situations:
- State Bar of South Dakota Lawyer Referral Service: 1-800-952-2333
- Employment law attorney licensed in South Dakota
- South Dakota Department of Labor for administrative questions: (605) 773-3682
Q: Where can I file a complaint about employment issues?
For wage and hour issues:
U.S. Department of Labor, Wage and Hour Division: 1-866-487-9243
For discrimination:
- SD Division of Human Rights: (605) 773-4493
- EEOC: 1-800-669-4000
For unemployment insurance:
SD Department of Labor, Unemployment Insurance: (605) 626-2452
For workers’ compensation:
SD Department of Labor, Workers’ Compensation: (605) 773-3681
