Easily manage employment in South Dakota

Payroll management in South Dakota

South Dakota has a stable economy supported by industries such as agriculture, healthcare, tourism, and manufacturing. With state-specific payroll regulations, including a higher minimum wage, no state income tax, and right-to-work laws, employers in South Dakota must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in South Dakota

Employers in South Dakota must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: South Dakota’s minimum wage is $11.20 per hour.
• Tipped employees must be paid a minimum of $5.60 per hour, with tips making up the difference to meet the standard minimum wage.
• Overtime rules:
• South Dakota follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• South Dakota does not impose a state income tax, meaning employers are only responsible for federal income tax withholding.

Unemployment insurance (UI) tax

• Employers must contribute to South Dakota’s Unemployment Insurance (UI) program, managed by the South Dakota Department of Labor and Regulation.
• The UI wage base in South Dakota is $15,000.
• UI tax rates vary based on an employer’s experience rating and range from 0% to 9.3%.
• New employers typically pay a 1.0% UI tax rate.

Workers’ compensation

• South Dakota law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Some exemptions apply, including certain agricultural workers, domestic workers, and independent contractors.

Payroll tax filing and payment deadlines

• Employers must register for a South Dakota Employer Account with the South Dakota Department of Labor and Regulation.
• UI tax reports must be submitted quarterly to the South Dakota Department of Labor and Regulation.
• Payroll tax payments can be made electronically through the South Dakota Unemployment Insurance Tax System.

Quick facts: Important considerations for employers

• State minimum wage compliance: South Dakota’s minimum wage is higher than the federal rate and is adjusted annually for inflation.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the South Dakota New Hire Reporting Center within 20 days.
• Paid sick leave: South Dakota does not require employers to provide paid sick leave, but employers may choose to offer it as a benefit.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: South Dakota is a right-to-work state, meaning employees cannot be required to join a union as a condition of employment.

Run payroll in South Dakota with Remote

Managing payroll in South Dakota requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.