Payroll South Dakota Unique Aspects of South Dakota Payroll Law and Practice
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Payroll in South Dakota: Key Aspects of State Payroll Laws and Practices
Summary
South Dakota has distinct payroll characteristics and regulations. This article provides an overview, covering tax withholding, unemployment insurance, wage and hour laws, and child support withholding.
No State Income Tax
South Dakota does not impose a state income tax, which means there are no requirements for state withholding deposits or state W-2 filings. Additionally, there are no supplemental wage withholding rates.
Taxation of Retirement and Cafeteria Plans
While the IRS allows certain salary reductions under Section 125 cafeteria plans and 401(k) plans to be non-taxable, South Dakota treats these as taxable for unemployment insurance purposes.
Unemployment Insurance Details
- Agency:
Department of Labor, Unemployment Insurance Division
Box 4730, 420 S. Roosevelt St., Aberdeen, SD 57402-4730
(605) 626-2452
- Taxable Wage Base: Wages up to $7,000.
- Reporting: Optional quarterly wage reporting on magnetic media. Records must be maintained for four years, including employee information and payroll details.
Wage and Hour Laws
- Enforcing Agency:
Department of Labor, Division of Labor and Management
700 Governors Dr., Pierre, SD 57501-2291
(605) 773-3681
- Minimum Wage: $5.15 per hour.
- No state law requires overtime payment for non-FLSA employers.
- Payment Frequency: Employees must be paid at least monthly; there is no required lag time between services performed and payment.
New Hire Reporting
Employers must report new hires and rehires, including the following details:
- Employee’s name, address, and social security number
- Employer’s name, address, and EIN
Reports are due within 20 days of hiring and can be submitted via mail, fax, or electronically. Late reporting incurs a civil penalty.
Direct Deposit Regulations
South Dakota allows compulsory direct deposit, but employees have the right to choose their financial institution in compliance with federal Regulation E.
Termination and Final Pay
Final pay for involuntarily terminated employees is due by the next payday if all employer property is returned. The same schedule applies to voluntary terminations.
Handling of Deceased Employees and Unclaimed Wages
There are no provisions for paying deceased employees, but unclaimed wages must be transferred to the state after one year. Employers must keep records of abandoned wages for ten years.
Tips and Meal Periods
Employers can use up to $3.02 as a tip credit. There are no requirements for rest or meal periods under state law.
Child Support Withholding
- Enforcing Agency:
Office of Child Support Enforcement, Department of Social Services
700 Governor's Dr., Pierre, SD 57501-2291
(605) 773-3641
- Deductions: Begin with the next payday after service, with payments sent within seven days. Termination notices must be sent within five days. Maximum withholding is 50% of income.
Please note that laws and regulations may change, so it's important to stay informed about updates.
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