Laws for Salaried Employees in South Dakota

The backbone for all labor laws in this country is the Fair Labor Standards Act (FLSA). This federal law sets the minimum standard for salaried workers that applies to employees in all states. These federal worker protections include a minimum wage floor and overtime pay requirements.

States can enact their own labor laws, but a worker has the right to rely on the law – federal or state – that sets the higher standard.

Some states have enacted laws offering significantly higher minimum wages and protections than the guarantees of the FLSA, while others largely piggyback on the federal law. South Dakota is somewhere in the middle, offering a higher minimum wage, but otherwise leaning heavily on the FLSA.

In 1938, the federal government enacted what would become the primary labor law in the country, the Fair Labor Standards Act of 1938, a law that provides significant rights to employees in all states.

Since the FLSA does not preempt state law, states are free to enact laws in this area, including minimum wages and working condition protections. They also can add protections not offered in the federal act. But no state law can cut back on the standards that are set out in FLSA protections.

A state can enact laws that set out reduced protections or establishing a minimum wage lower than the federal minimum, but these laws would be moot since workers would rely on the federal law instead since it offers greater protection.

For example, the FLSA mandates time-and-a-half as an hourly wage rate for overtime pay for all hours worked over 40 by an individual in a week.

A state could enact a law requiring double-time pay instead, and it would be implemented. But if a state law set overtime pay at time-and-a-quarter, workers would still be entitled to time-and-a-half under the federal law.

What standards does the FLSA set for workers? It enacts provisions regarding:

• ‌FLSA Minimum Wage:‌ The federal minimum wage is $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.
• ‌FLSA Overtime Requirements:‌ Covered nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay. There is no limit on the number of hours employees 16 years or older may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays or regular days of rest, unless overtime is worked on such days.
• ‌Hours Worked:‌ Hours worked ordinarily include all the time during which an employee is required to be on the employer’s premises, on duty or at a prescribed workplace.
• ‌Record-keeping:‌ Employers must display an official poster outlining the requirements of the FLSA. Employers must also keep accurate employee time and pay records.
• ‌Child Labor:‌ These provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being.

Like many states, the state of South Dakota has enacted a higher minimum wage than the federal government, but otherwise piggybacks on the FLSA. These labor rules are administered and enforced by the state Division of Labor and Management, part of the South Dakota Department of Labor and Regulation.

Most South Dakota labor laws are found in Title 60 of the South Dakota Code, entitled Labor and Employment. It covers everything from Obligations of Employer and Employee to Wages, Hours and Conditions of Employment.

It does not require employers to offer their workers paid time off (PTO) unless this is part of their employment contract.

Most people are aware of the minimum wage laws that set a floor on the wages that a covered employer can pay to their workers.

The FLSA established a minimum wage floor in 1938, requiring that all covered workers receive at least the minimum amount.

Congress sets the minimum wage and can increase it when they want to. It has been increased several times over the past 80 years.

Still, today, the current federal minimum wage is seen as very low. The current minimum wage set under the FLSA is $7.25 an hour. That means that a worker who puts in 40 hours a week at minimum wage grosses only $290 per week.

States are free to set a minimum wage that is higher than this amount, and many do. Some states like California mandate a much higher minimum wage, and, additionally, allow municipalities to set an even higher wage floor.

No states have enacted legislation setting a lower minimum wage, which makes sense since it would not be effective. But many states – currently 15 – simply use the federal standard and set their wage at $7.25 an hour. Five others have not legislated a minimum wage at all, so the federal law applies.

Most states offer minimum wage protection to their workers that is higher than the federal amount of $7.25. The highest current minimum wage in South Dakota for non-tipped employees is $9.95 an hour effective January 1, 2022. On January 1,2023, the minimum wage for non-tipped employees in South Dakota will go up to $10.80 an hour.

Non-tipped employees can be paid a lower wage as long as their average hourly take-home pay with tips is $4.975 per hour. As of January 1, 2023, the hourly minimum wage for tipped employees will rise to $5.40 an hour. South Dakota employers must record all tips and make sure that every employee receives no less than the current minimum wage.

Keep in mind that the minimum hourly wage sets a floor, not a ceiling. An employer is free to pay employees more than the amount set by either the federal or state minimum wages. There is no cap on worker wages.

The minimum wage law is the most evident when applied to hourly workers. But these laws can and do impact salaried workers as well. Minimum wage requirements apply to all non-exempt workers, salaried or not. A non-exempt worker is one who does not fall into one of the exempt categories set out in the FSLA, as discussed below.

A non-exempt, full-time worker's salary must meet or exceed 40 times the minimum wage because 40 hours is the standard workweek established in the FLSA. For example, the minimum salary for a non-exempt worker in South Dakota would be 40 times $9.95, or $398 a week.

Certain types of employees are exempted from the terms of the FLSA. These are usually employees in positions that are likely to pay more than the minimum, sometimes called white-collar workers. They hold jobs that are specifically excluded from the protections of the FLSA. The four main exemption areas are:

• Executive employees.
• Administrative employees.
• Professional employees.
• Outside sales employees.

There are other exempt positions and types of work outside these four categories, and not all can properly be considered "white collar." These include farm workers and individuals employed by certain seasonal and recreational establishments

The exempt category terms are defined in the Department of Labor (DOL) regulations. South Dakota law includes the same definitions as the FSLA, which means that the same categories of employees are exempted in the state as well. The principal exempt categories are:

• ‌​‌Executive:​‌‌ Salaried workers are considered to be in executive positions if they are in management and have at least two other employees working under them. They cannot spend more than 20 percent of their work time doing other work tasks, or 40 percent if they are in retail.
• ‌​‌Administrative:​‌‌ Workers exempted from the FLSA as administrative workers facilitate business operations, develop management policies or lead administrative training. They have the same work-time ratios as executives and cannot spend more than 20 or 40 percent of their work time on other matters.
• ‌‌​Professional:‌​‌ These workers are employees offering advanced knowledge, education and training. Professional workers include those employed as artists, certified teachers and computer professionals. Their job duties are primarily intellectual and involve exercising their own discretion and judgment in pursuing assignments. The same 20/40 ratios apply.
• ‌‌​Outside sales:​‌‌ Workers whose jobs involve making sales or taking orders outside of their employer's main workplace are exempted as outside salespersons. To be in this category, they must spend at least 80 percent of their time doing sales work.

​If an employee's job description fits the DOL definition of an exempt position, that employee cannot rely on either the minimum wage or the overtime provisions of the FLSA or their state.

The law applies the exemptions on an individual workweek basis, so workers who perform exempt and non-exempt duties in the same week are generally considered non-exempt for that period. And the courts narrowly construe the exemptions against the employer asserting them.

It's a common misconception that overtime laws restrict the number of hours an employer can force an employee to be on the job during a day or a week. But this is not at all accurate. Nothing in the federal labor laws nor in the South Dakota labor laws establish any limits on an adult employee's work hours.

Rather, overtime is a matter of money. A standard workweek under the FLSA and South Dakota labor laws refers to 40 hours worked in a seven-day period. These hours must be paid at the applicable minimum wage or higher.

It's important to understand that an employer can require an employee to work every day for the entire week without violating the law, and/or they can require the employee to work long hours, like 10 or 12 per shift.

Overtime laws do not put a legal limit on the hours a job can require, but they do put a brake on hours worked by mandating that the employer pay non-exempt workers time-and-a-half for any hours above 40 in the workweek.

That means that with South Dakota's minimum wage of $9.95 an hour, overtime pay will be $14.90 an hour. And this applies to both hourly and salaried workers.

An employer must calculate hourly wage for a worker who earns a salary, but how? The employer divides the weekly regular rate of pay by the weekly hours.

For example, if a salaried worker is required to work 50 hours a week and earns $500 a week, they make $10 an hour. That means that the employer is required to pay the employee overtime (150 percent of $10) for every hour over 40, or $15 an hour.

Sometimes this calculation is skewed because the sum resulting from dividing the weekly salary by the hours worked is less than the minimum wage. In that case, overtime pay is calculated by dividing the wage by 40. For example, if the 50-hour-a-week employee earned a weekly salary of $450 a week, their hourly wage would be $9 an hour.

Since this is under the minimum wage, overtime would be calculated by dividing the weekly wage ($450) by 40. The resulting hourly wage of $11.25 would be used for the 150 percent overtime computation, yielding an overtime wage of $16.875 per hour of overtime.