Nothing in this article constitutes legal advice. Please consult a tax attorney or tax professional if you have questions about minimum wage compliance.
At the beginning of this year, a minimum wage increase went into effect in 20 states across the country, including South Dakota. As a small business owner, it’s essential that you stay up to date on minimum wage requirements to make sure you’re compliant.
To help you stay on top of the latest, here’s a guide to minimum wage requirements in the Mount Rushmore State.
What is the minimum wage in South Dakota?
As of January 1, 2019, South Dakota’s minimum wage is $9.10 per hour, which increased by $0.25 from $8.85. The minimum wage applies to most South Dakota employees, but there are some exceptions, including:
- Tipped employees: Employers can take a “tip credit” of up to 50 percent of the state minimum wage of $9.10, meaning they must pay tipped employees a minimum of $4.55 per hour. However, if tipped employees don’t make enough in tips to earn at least the state minimum wage, employers must make up the difference.
- Minors: For employees under the age of 20, South Dakota allows a training minimum wage of $4.25 per hour for their first 90 days of employment.
- Full-time and vocational students who work part-time can be paid 85 percent of the minimum wage, as long as they are registered students.
- Employees considered exempt under the Fair Labor Standards Act (FLSA).
Keep in mind that some counties, cities, and towns may have their own minimum wage laws. Be sure to check what local wage laws may apply to you.
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Are there plans to change the minimum wage beyond 2019?
As of now, there’s no minimum wage increase scheduled for 2020.
How should small business owners prepare for changes to the minimum wage?
While there are no immediate plans for a minimum wage increase, considering the changes this year, now’s the time to take stock of your business’s financial health. By doing that, you can determine if you need to make budget adjustments. Not only that, but you can take other steps to ensure your business is prepared for minimum wage changes, including the following:
- Review your staffing plan: Evaluate your monthly sales and expenses to see if you need to adjust your staffing plan. If necessary, find ways to streamline your labor costs. For example, if you have a seasonal business, consider hiring contract employees during your busy season and operate with fewer full-time employees year round.
- Make smart hires (and keep them): As you probably know, the hiring process is time-consuming and expensive. Make it worthwhile by using best hiring practices. Once you’ve hired the right people, make retention a priority by taking these steps.
- Upgrade your technology: Consider automating time-consuming tasks like payroll to save time and money.
While these are helpful guidelines to follow, to make sure your business is prepared and stays in compliance, you should discuss South Dakota’s minimum wage laws with your accountant and lawyer.