South Dakota Minimum Wage Requirements: Essential Business Guide

Knowing the rules around minimum wage is a fundamental part of running a compliant and fair business. South Dakota’s minimum wage laws are straightforward but have unique elements that employers need to apply correctly. Staying updated ensures payroll accuracy and avoids legal issues.

For 2025, South Dakota employers face updated rates and requirements tied directly to inflation. These adjustments aim to protect workers' earnings while maintaining consistency for businesses. Understanding how state and federal standards overlap is key to compliance.

This guide outlines everything employers need to know about South Dakota’s 2025 minimum wage laws, including new rates, tipped employee rules, and how the state regulations interact with federal law.

South Dakota Minimum Wage Basics (2025)

The minimum wage for non-tipped employees in South Dakota increased to $11.50 per hour on January 1, 2025. This rate adjusts annually based on the Consumer Price Index (CPI), ensuring wages keep pace with rising living costs. The law explicitly prevents decreases, even if the cost of living drops.

Employers must follow the higher applicable rate when both state and federal minimum wage laws apply. Since South Dakota's minimum wage exceeds the federal rate of $7.25 per hour, businesses operating in the state are required to pay the $11.50 hourly rate to eligible employees.

Tipped employees must receive a cash wage of at least $5.75 per hour, which is half of the state's minimum wage. Employers are obligated to ensure that tips combined with the cash wage meet or exceed $11.50 per hour. When tips fall short, employers must pay the difference to comply with the law.

Tipped vs. Non-Tipped Wage Requirements in South Dakota

South Dakota's minimum wage laws for 2025 separate employees into tipped and non-tipped categories, with clear requirements for each. Employers must understand the specific pay structures to avoid compliance issues.

Tipped Employees in South Dakota

Tipped employees earn a base cash wage of $5.75 per hour. This amount covers half of the $11.50 hourly minimum wage. However, their total pay—base wage plus tips—must always equal or exceed $11.50 per hour. Employers cannot assume tips will cover the difference without verification.

Accurate tip tracking is mandatory. Employers must document all tips received, whether in cash or through credit card payments. If tips are insufficient to meet the $11.50 hourly minimum, the employer is required to pay the remaining amount to close the gap. This adjustment must be made during the same pay period to maintain compliance.

Non-Tipped Employees in South Dakota

Non-tipped employees are entitled to the full hourly minimum wage of $11.50, with no offsets or deductions for tips. Their pay structure is straightforward, and employers must ensure payroll systems reflect this rate for all applicable positions. Misclassifying a non-tipped employee as tipped is not permitted and may result in penalties.

Employers' Responsibility

Employers are responsible for ensuring all employees receive the correct minimum wage. For tipped employees, this means verifying that tips bring the total hourly earnings up to $11.50. When tips fall short, the employer must make up the difference. Payroll records must document compliance with these requirements, as regulators may review them for accuracy.

Annual Wage Adjustments in South Dakota

South Dakota's minimum wage rate adjusts annually to align with changes in the cost of living. The adjustment is calculated using the Consumer Price Index (CPI), a federal measure published by the U.S. Department of Labor. This ensures wages increase when inflation rises, preserving employees' purchasing power.

State law guarantees that the minimum wage can never decrease, even if the CPI shows a drop in living costs. Employers can rely on this stability, knowing the rate will only hold steady or increase each year.

The adjusted minimum wage for the upcoming year is announced by October 15. This timeline provides employers with enough notice to prepare payroll systems and budgets before the new rate takes effect on January 1. The updated rate is made publicly available through the South Dakota Department of Labor and Regulation, ensuring businesses and workers can access the information easily.

Exemptions and Special Categories in South Dakota

South Dakota's minimum wage laws include specific exemptions for certain jobs and employment types. These exceptions address unique circumstances where the standard wage requirements might not apply. Employers must clearly understand these categories to remain compliant and avoid errors in wage calculations.

Seasonal Amusement or Recreation Establishments

Seasonal businesses, such as amusement parks or summer camps, are exempt from paying the minimum wage under two specific conditions:

Short Operating Periods: The business operates for fewer than seven months within a calendar year.
Revenue-Based Qualification: The average revenue for any six months during the previous calendar year does not exceed 33.3% of the business's average revenue for the other six months.

Employers need to carefully track operational timelines and revenue figures to determine whether their business qualifies under these exemptions. Documentation of these metrics is key to ensuring compliance with the exemption criteria.

Babysitters and Outside Salespersons

Babysitters and outside salespersons are not covered by South Dakota's minimum wage laws. Babysitters are typically hired casually, often for short-term or irregular work. Outside salespersons, who primarily work off-site earning commissions, also fall outside the scope of the wage requirements.

It's important for employers to classify roles correctly. For example, a salesperson working exclusively at a fixed location does not meet the definition of an outside salesperson and would be subject to the standard minimum wage.

Training Wage (Opportunity Wage)

The opportunity wage allows employers to pay workers under 20 years old $4.25 per hour during their first 90 consecutive days of employment. However, there are strict guidelines in place:

The lower wage applies only for the initial 90 days of employment. After this period, the worker must be paid the full $11.50 per hour.
Employers are prohibited from replacing current employees with new hires at the training wage to reduce payroll costs.

This wage option supports youth employment while ensuring existing workers are not unfairly displaced. Employers should monitor the employment timeline closely to ensure timely pay adjustments after the 90-day period ends.

Apprentices and Persons with Developmental Disabilities

Apprentices and individuals with developmental disabilities may earn less than the state minimum wage under specific conditions. Apprenticeships often involve a lower wage to reflect the on-the-job training provided as part of the program.

For workers with developmental disabilities, a special permit from South Dakota's Department of Labor and Regulation is required. The permit outlines the wage rate based on the individual's productivity and work capabilities. Employers must adhere to the permit's terms and maintain compliance by keeping records of the arrangement.

Each exemption has clear boundaries and documentation requirements. Employers who utilize these exemptions must stay diligent to ensure compliance with South Dakota's labor laws while maintaining fair employment practices.

Employer Compliance and Recordkeeping in South Dakota

Employers in South Dakota must follow specific rules to ensure payroll accuracy and legal compliance. Each requirement is straightforward but demands attention to detail. Consistent processes for wage payments, overtime calculations, and recordkeeping are non-negotiable.

Wage Payment Law

All wages must be paid on the regular payday established by the employer. If employees worked hours in 2024 but those hours are paid in 2025, the 2024 minimum wage rate applies to those hours. Employers need to carefully track when work is performed and ensure the correct rate is applied for payments that cross into a new year. This prevents errors and ensures compliance with state wage requirements.

Overtime Rules

South Dakota adheres to federal overtime laws under the FLSA. Non-exempt employees must receive time and one-half their regular hourly pay for any hours worked beyond 40 in a single workweek. Employers must track weekly hours accurately to calculate overtime correctly and verify that exempt employees meet all criteria to avoid misclassification.

Recordkeeping Essentials

Maintaining detailed records is mandatory for compliance with South Dakota's wage laws. Employers must document specific information for every employee and keep records organized and accessible.

Hours Worked: Record all hours worked, including overtime and tipped hours for applicable employees. For tipped employees, keep a detailed log of tips reported during each pay period.
Payroll Records: Maintain records of each employee's gross wages, deductions, and net pay. Ensure payroll reflects minimum wage compliance and overtime payments. Retain these records for at least three years, as required under federal guidelines.
Exemption Documentation: For any employees exempt from the standard wage requirements—such as apprentices or seasonal workers—retain documentation supporting the exemption. This may include permits issued by the state or agreements related to apprenticeships.

Accurate recordkeeping ensures compliance and protects the employer during audits or disputes. It also provides transparency for employees and demonstrates adherence to wage laws.Got it! Here's the rewritten version with the requested tone and style adjustments:

Frequently Asked Questions (FAQ)

Understanding South Dakota's minimum wage laws can feel complicated, but clear rules and straightforward guidelines make compliance manageable. Here are the most common questions employers ask about minimum wage requirements in the state.

1. What are the exemptions for minimum wage in South Dakota?

Some workers and businesses are not subject to South Dakota's minimum wage laws. Exemptions include:

Seasonal Amusement or Recreational Establishments: Businesses that operate fewer than seven months a year or meet specific revenue limits.
Babysitters: Individuals providing casual babysitting services on an irregular basis.
Outside Salespersons: Employees whose primary work occurs off-site and involves making sales.
Apprentices: Workers enrolled in state-defined apprenticeship programs tied to learning a trade.
Individuals with Developmental Disabilities: Employees with state-issued permits defining adjusted wage rates.

Employers must ensure the role qualifies for the exemption and maintain proper documentation to avoid compliance issues.

2. Which states pay $15 an hour minimum wage?

While South Dakota's minimum wage for 2025 is $11.50 per hour, several states have reached or exceeded $15.00 per hour. These include:

California: $16.50 per hour.
Massachusetts: $15.00 per hour.
Washington D.C.: $17.50 per hour.

Each state sets its own rates and rules, meaning employers with operations in multiple states must track and apply the correct minimum wage for each location.

3. What was the South Dakota minimum wage in 2024?

In 2024, the minimum wage for non-tipped employees in South Dakota was $11.20 per hour. Tipped employees earned a base wage of $5.60 per hour, with employers required to ensure tips combined with the base pay met or exceeded $11.20 per hour.

This rate stemmed from an annual adjustment tied to the Consumer Price Index. The adjustment process ensures wages reflect inflation but prohibits decreases, maintaining consistency for employers and employees.

4. What is the wage payment law in South Dakota?

Employers must pay employees regularly, at least once per month or on agreed payday schedules. When an employee leaves a job, final wages must be paid no later than the next scheduled payday.

Payroll systems must calculate and distribute wages correctly, including minimum wage and overtime requirements. Employers must also keep detailed records of hours worked, wages paid, and any deductions, ensuring all payments comply with South Dakota labor laws.

Navigating the complexities of minimum wage laws can be challenging, but having the right tools and guidance makes all the difference. We're here to help you stay compliant and confident in your payroll practices. Book a demo with us today to see how our platform simplifies HR and keeps you ahead of changing regulations.