Getting familiar with the South Dakota employee separation process is one of your key employer obligations. From employee termination laws to employee rights, knowing the applicable laws helps protect your organization from legal liability.
This employee separation checklist and guide provides a helpful overview of South Dakota’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
South Dakota Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in South Dakota
In South Dakota, all separated employees must receive their final paycheck by the next scheduled payday or when they return any employer property in their possession. All earned wages or compensation must be included in this final payment. Employers are not obligated to pay out accrued and unused vacation time, unless otherwise specified in an employee contract or company policy.
While the law does not specify how final wages should be paid, best practice dictates using regular pay channels. Employers who fail to pay wages may be liable for unpaid wages and damages up to double the amount owed. They may also pay attorney’s fees if the employee recovers wages in court. Willful failure to pay wages is a Class 2 misdemeanor, punishable by up to $500 in fines, 30 days’ imprisonment, or both.
2. Firing Employees in South Dakota
South Dakota is an at-will employment state, so firing employees can be done for any legal reason, at any time. However, the state does have one notice requirement: all separated employees must be provided with the Notice to Employees: Availability of Unemployment Compensation form at the time of separation.
3. Severance Agreements in South Dakota
If your severance agreement includes executing claims releases with employees, you’re obligated to clearly state the claims being released under both federal and state law. In South Dakota, releasable state law claims include those under the South Dakota Human Relations Act, South Dakota’s leave laws, and South Dakota’s minimum wage and overtime laws. Furthermore, ensure that any release of claims only waives those that arose before the agreement’s effective date.
Additionally, employers must also remember to review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision restricts the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in South Dakota
If an employee has an Income Withholding for Support Order (“IWO”), promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. You may expedite the process and register for online reporting with the Federal Office of Child Support Enforcement here.
If you prefer physical reporting, you can report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in South Dakota
When separating from your last South Dakota employee, consider whether this ends your business transactions in the state. If so, you may wish to withdraw your state business registration. The process is straightforward: simply identify your organization’s legal structure and file the appropriate documentation with the South Dakota Secretary of State.
For-Profit Corporations must file this Certificate of Withdrawal. Non-Profit Corporations should file this Certificate of Withdrawal, and finally, Limited Liability Companies (LLCs) need to file this Certificate of Cancellation.
Stay Compliant with South Dakota Employee Separation Requirements
Staying compliant with Employee Separation Agreement regulations helps employers ensure legal compliance and mitigate risk to your company.
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