Unemployment Insurance Law Summaries
South Dakota, Unemployment Insurance Law Summaries
South Dakota's unemployment insurance law is located in Title 61, Chapters 61-1 to 61-7, South Dakota, Secs. 61-1-1 to 61-7-23, as amended; and in the Rules of the South Dakota Employment Security Department, Rules 47:06:01:01 to 47:06:05:28. The full text of the law is available beginning at Unemployment Insurance Reports UI-SD ¶4001 .
DEFINITIONS
“Employer” means one who pays wages of $1,500 or more in any calendar quarter in either the current or preceding year, or had one individual in employment in each of 20 weeks in either the current or preceding year. Generally, an employer subject to FUTA is automatically subject to South Dakota law.
“Employment:” Service by any officer of a corporation, or any individual who, under the usual common-law rules, has the status of an employee, with exceptions listed below. Services by certain agent-drivers or commission-drivers and traveling or city salespersons are covered. Service by an officer or member of a crew of an American vessel is also covered if management and control of that vessel is within South Dakota.
Service performed for wages constitutes “employment ” unless and until it is shown that the individual is free from control or direction; and customarily engaged in independently established trade, occupation, profession or business.
Generally, employment subject to the FUTA is automatically subject to the South Dakota law.
“Wages:” All remuneration paid for services, including commissions, bonuses, cash value of all remuneration paid in any medium other than cash, tips and other remuneration on which a tax is imposed under the FUTA, and cafeteria plan payments unless specifically excluded. The term “wages” does not include:
For January 1, 1983, to December 31, 2006-Remuneration over $7,000 per year paid to an individual by an employer, counting remuneration paid by employer's predecessor and for service in another state.
For January 1, 2007, to December 31, 2007, inclusive-Remuneration over $8,000 per year paid to an individual by an employer, counting remuneration paid by employer’s predecessor and for service in another state.
For January 1, 2008, to December 31, 2008, inclusive-Remuneration over $9,000 per year paid to an individual by an employer, counting remuneration paid by employer’s predecessor and for service in another state.
For January 1, 2009 to December 31, 2009, inclusive-Remuneration over $9,500 per year paid to an individual by an employer, counting remuneration paid by employer’s predecessor and for service in another state.
On or after January 1, 2010-Remuneration over $10,000 per year paid to an individual by an employer, counting remuneration paid by employer’s predecessor and for service in another state.
Other exclusions from wages are listed below.
Notwithstanding above provisions, wages covered by Federal Unemployment Tax Act are also covered by South Dakota Law.
COVERAGE
Generally, an employer subject to FUTA is automatically subject to South Dakota law.
Service by any officer of a corporation, or any individual who, under the usual common-law rules, has the status of an employee, with exceptions listed below. Services by certain agent-drivers or commission-drivers and traveling or city salesmen are covered. Service by an officer or member of a crew of an American vessel is also covered if management and control of that vessel is within South Dakota.
Service performed for wages constitutes “employment ” unless and until it is shown that the individual is free from control or direction; and customarily engaged in independently established trade, occupation, profession, or business.
Generally, employment subject to the FUTA is automatically subject to the South Dakota law.
Agricultural and domestic employers.- Services performed in agricultural labor for an employer who employs 10 or more workers performing such services in 20 weeks in either the current or preceding calendar year or who pays cash remuneration of $20,000 or more for such services in any quarter of the current or preceding calendar year are covered. When agricultural labor is supplied by a crew leader, the employing unit for whom the services are performed is the employer of the crew members unless the crew leader is registered under the Farm Labor Contractor Registration Act of 1963, or substantially all of the crew members operate or maintain certain mechanized equipment that is provided by the crew leader. In either of these instances, the crew leader is the employer.
Domestic service.- Domestic service in a private home, local college club or local chapter of a college fraternity or sorority is covered if performed for an employing unit that paid wages of $1,000 or more for such services in any quarter of the current or preceding calendar year.
Government and nonprofit employers.- Coverage is mandatory for most services performed for the state, for nonprofit organizations employing four or more individuals in each of 20 weeks in either the current or preceding calendar year, and for Indian tribes. Political subdivisions are mandatorily covered. Other government services, including those for a foreign government, are not covered.
Nonprofit organizations, political subdivisions and Indian tribes have the option of financing the payment of benefits by either the regular contributions method or the reimbursement method. Other state employers and political subdivisions that have elected coverage prior to 1978 must use the reimbursement method.
Nonprofit organizations, political subdivisions and Indian tribes may choose one of the following reimbursement methods:
(a) payments equal to full amount of regular plus
(full amount for state employers and Indian tribes) the extended benefits paid to claimants, or
(b) a variable percentage based on total payroll.
Under (b), employers are subject to an adjustment at the end of the year to reflect actual benefit costs. Nonprofit organizations and Indian tribes may be required to execute and file a surety bond. State employers and Indian tribes are required to use method (a).
EXCEPTIONS
Wages.- The term “wages” does not include:
For January 1, 1983, to December 31, 2006-Remuneration over $7,000 per year paid to an individual by an employer, counting remuneration paid by employer's predecessor and for service in another state (see DEFINITIONS, above, for information that applies after December 31, 2006).
Payments to individual or his or her dependent under plan or system established on account of sickness or accident disability if received under a workers' compensation law, etc.
Payment of employees' FICA tax without deduction from wages.
Payments received by members of the South Dakota National Guard for weekend training.
Notwithstanding above provisions, wages covered by Federal Unemployment Tax Act are also covered by South Dakota law.
Employment.- The term “employment” does not include the following:
Insurance agents or solicitors wholly on commission basis.
Interns and student nurses.
Newspaper and shopping news carriers under 18.
Organization exempt from income tax under Sec. 501(a) (other than an organization described in Sec. 401(a)) or Sec. 521 of the Internal Revenue Code if the remuneration for such service does not exceed $50.
Service performed in the employ of a school, college or university by a student enrolled and regularly attending classes or service by the spouse of that student if spouse's employment is under program of assistance to the student.
Service by student enrolled at a nonprofit or public educational institution in full-time work-study program, but exemption not applicable if service performed under program established for an employer or group of employers.
Relatives, i.e., service by individual in employ of son, daughter, or spouse, or by child under 21 in employ of parent.
Service covered by federal unemployment compensation system.
Service for a hospital by a patient of the hospital.
Employment specifically exempted from coverage under the Federal Unemployment Tax Act.
Government and nonprofit employers.- Coverage is mandatory for most services performed for the state and for nonprofit organizations employing four or more individuals in each of 20 weeks in either the current or preceding calendar year. Political subdivisions are mandatorily covered. Other government services, including those for a foreign government, are not covered.
Services for a nonprofit organization or the state do not include the following:
Church or organization operated primarily for religious purposes and which is controlled by a church.
Religious duties of a minister or member of a religious order.
Patients performing services in a rehabilitation facility or sheltered workshop.
Individual receiving unemployment work-relief or work-training under program financed by federal agency, or an agency of a state or political subdivision.
Inmate of a custodial or penal institution.
The following individuals are exempt: elected officials; members of legislative body or the judiciary; members of the state National Guard or Air National Guard; employees serving on a temporary basis in case of fire, storm, snow, earthquake, flood or similar emergency; and individuals in certain major nontenured policymaking or advisory positions.
Service for an Indian tribe does not include all but the first three items above.
PROCEDURES
Base period.- First four of the last five completed calendar quarters immediately preceding benefit year. For an individual who fails to qualify due to receipt of temporary total disability payments under workers' compensation, base period is first four of the last five completed quarters preceding the disability if a claim for unemployment benefits is filed within 24 months of the date on which the disability was incurred.
Benefit year.- One year beginning with day on which individual files valid claim for benefits.
Weekly benefit amount.-
of wages in high quarter of base period, less
of any wages paid to claimant with respect to that week, computed to the next lower multiple of $1. Weekly benefit amount is reduced by 75% of the amount by which the wages or earnings exceed $25 and no benefit payment will be made when earnings equal or exceed the weekly benefit amount. Minimum weekly benefit amount is $28. Although benefits are not assignable, claimants may elect to voluntarily withhold income taxes from their unemployment compensation payments.
Maximum weekly benefit amount is computed annually as 50% of the statewide average weekly wage. Maximum for year beginning 7/1/2006 increases to $274.
Maximum total benefits.-
of claimant's total base period wages, but not more than 26 times claimant's weekly benefit amount, raised to next lower multiple of $1. In addition, during certain periods of high unemployment, payment of extended benefits is at claimant's weekly benefit amount.
Benefit eligibility: Requirements-
Base period wages in other than high quarter equal to or in excess of 20 times claimant's weekly benefit amount and high quarter wages of at least $728;
be able and available for work; and
serve one-week waiting period.
Benefits may not be paid to instructors, researchers and principal administrators of an educational institution during school vacation periods or paid sabbatical leaves based on service with such institution. Benefits are not payable to nonprofessional employees of educational institutions during periods between school years or terms if there is reasonable assurance of reemployment in the second year or term. Retroactive payment of benefits will be made if such assurance is given and there is no opportunity to perform services in the second year or term.
The above disqualification also applies to employees performing services at an educational institution while employed by an educational service agency and, to services provided under a contract between an employer and a public or private school if the contract is for services that the school could have had performed by its employees and the individual performing the services is notified in writing of these provisions prior to the commencement of employment.
The above disqualifications of school employees do not apply to any individual who is in the employ of an elementary or secondary school operated by the federal government or a political subdivision thereof.
Claimant ineligible to receive benefits in more than one benefit year as the result of one separation from work unless he or she earns four times his/her current weekly benefit amount after the establishment of the first benefit year.
Notwithstanding availability requirement and disqualification for refusal of suitable work (see below), benefits may not be denied to individual in approved training.
An individual who has earned wage credits in an occupation that generally requires shift work must be available for all shifts or work schedules unless he/she has a compelling reason for not working one or more shifts or work schedules.
Benefits are not payable to professional athletes for any period between sport seasons if there is a reasonable assurance that the individual will perform services in both seasons.
Benefits are not payable to an alien unless he/she has been lawfully admitted for permanent residence, is lawfully present for the purpose of performing services, or is otherwise permanently residing in the U.S. under color of law.
Disqualifications-Period
Voluntary leaving of most recent work without good cause-disqualified until re-employed in at least six weeks during each of which he or she earned not less than the weekly benefit amount. There is good cause for voluntarily leaving if (1) continued employment presents a hazard to the employee's health, provided that prior to the separation, the employee is examined by a licensed practitioner of the healing arts and advised that continued employment presents a hazard to his or her health and the health hazard is supported by a certificate signed by the licensed practitioner (an additional certificate may be requested); (2) the employer required the employee to relocate his or her residence to hold his or her job; (3) the employer's conduct demonstrates a substantial disregard of the standards of behavior that the employee has a right to expect of his or her employer or the employer has breached or substantially altered the contract for employment; (4) the individual accepted employment while on layoff and subsequently quit such employment to return to work for his or her regular employer; (5) the employee's religious belief mandates the leaving (not applicable if the employer has offered reasonable accommodations to the employee taking the belief into consideration and the offer is made before the employee leaves his or her job); or (6) the employee voluntarily quits a job in order to protect him- or herself from domestic abuse, subject to specific requirements.
Discharge or suspension for misconduct from most recent work connected with work-disqualified until re-employed in at least six weeks during each of which he/she earned not less than the weekly benefit amount.
Refusal of suitable work without good cause -disqualified until re-employed in at least six weeks during each of which he/she earned not less than the weekly benefit amount.
Labor dispute-duration.
Receipt of termination, vacation, holiday, severance, or dismissal payments or wages in lieu of notice, whether legally required or not, or workers' compensation payments-week for which received, unless less than benefits otherwise due, in which case benefits reduced by amount of such payments.
Receipt of pension, annuity or retirement payment, including disability pension payments, based on previous work of individual -week for which received, unless less than benefits otherwise due, in which case benefits reduced by amount of such payments. Applicable only to primary Social Security retirement benefits and to payments made under a plan contributed to by a base period employer. Not applicable to military service-connected disability payments or to that part of a pension that is attributable to contributions of the individual.
Receipt of unemployment benefits under other state or federal law-period for which payments are made.
Receipt of vacation pay received after separation from employment-amount of vacation pay deducted from benefits, except that payments made based entirely on an individual's contributions to a fund from which vacation payments are made are not vacation pay.
Misrepresentation to obtain benefits-1-52 weeks.
Employed at least 30 days while incarcerated in custodial or penal institution and terminated from such employment because of transfer or release from the institution-disqualified until reemployed at least six weeks in each of which he or she earns at least the weekly benefit amount.
WHAT THE EMPLOYER MUST DO
Pay the standard rate.- 1.2%. Maximum possible current rate is 7.0% (not including any investment fee). Minimum is 0.0%. No employee tax.
Experience rates.- Employer becomes eligible for an experience rate for a calendar year when benefits have been chargeable to its account throughout the 24 months preceding the computation date (generally, December 31). A new employer pays 1.2% for the first year that it is subject to the law and thereafter, if it has a positive account balance, 1.0% until it qualifies for a reduced rate.
Commission can refuse a reduced rate to any employer who is delinquent for contributions, interest or reports.
If total credits in employer's experience rating account exceed benefit charges and employer is eligible for a reduced rate, its rate is determined on the basis of the appropriate table below and its reserve ratio. To compute reserve ratio, balance of credits in employer's account is divided by employer's total taxable payroll for the preceding three years.
For the calendar year 1993 to calendar year 2006, inclusive, the total rates below are the basic rates and do not include the “investment in future” fee (see below).
ContributionRate
|
Reserve Ratio
|
|---|
7.00%
|
Less than −7.00%
|
6.50%
|
−7.00% and less than −6.50%
|
6.00%
|
−6.50% and less than −6.00%
|
5.50%
|
−6.00% and less than −5.50%
|
5.00%
|
−5.50% and less than −5.00%
|
4.50%
|
−5.00% and less than −4.50%
|
4.00%
|
−4.50% and less than −4.00%
|
3.50%
|
−4.00% and less than −3.50%
|
3.00%
|
−3.50% and less than −3.00%
|
2.50%
|
−3.00% and less than −2.50%
|
2.00%
|
−2.50% and less than −2.00%
|
1.80%
|
−2.00% and less than −1.50%
|
1.60%
|
−1.50% and less than −1.00%
|
1.40%
|
−1.00% and less than −0.50%
|
1.20%
|
−0.50% and less than 0.00%
|
1.00%
|
0.00% and less than 0.20%
|
0.90%
|
0.20% and less than 0.40%
|
0.80%
|
0.40% and less than 0.60%
|
0.70%
|
0.60% and less than 0.80%
|
0.60%
|
0.80% and less than 1.00%
|
0.50%
|
1.00% and less than 1.20%
|
0.40%
|
1.20% and less than 1.30%
|
0.30%
|
1.30% and less than 1.40%
|
0.20%
|
1.40% and less than 1.50%
|
0.10%
|
1.50% and less than 1.60%
|
0.00%
|
1.60% and over
|
For calendar year 2007, the following chart applies. The “investment in future” fee is not included (see below).
|
|
Contribution
Rate
|
|
Reserve Ratio
|
|---|
|
|
8.50%
|
|
Less than −7.00%
|
|
|
8.00%
|
|
−7.00% and less than
|
−6.50%
|
|
|
7.50%
|
|
−6.50% and less than
|
−6.00%
|
|
|
7.00%
|
|
−6.00% and less than
|
−5.50%
|
|
|
6.50%
|
|
−5.50% and less than
|
−5.00%
|
|
|
6.00%
|
|
−5.00% and less than
|
−4.50%
|
|
|
5.50%
|
|
−4.50% and less than
|
−4.00%
|
|
|
5.00%
|
|
−4.00% and less than
|
−3.50%
|
|
|
4.50%
|
|
−3.50% and less than
|
−3.00%
|
|
|
4.00%
|
|
−3.00% and less than
|
−2.50%
|
|
|
3.50%
|
|
−2.50% and less than
|
−2.00%
|
|
|
3.00%
|
|
−2.00% and less than
|
−1.50%
|
|
|
2.50%
|
|
−1.50% and less than
|
−1.00%
|
|
|
2.00%
|
|
−1.00% and less than
|
−0.50%
|
|
|
1.50%
|
|
−0.50% and less than
|
0.00%
|
|
|
1.00%
|
|
0.00% and less than
|
0.20%
|
|
|
0.90%
|
|
0.20% and less than
|
0.40%
|
|
|
0.80%
|
|
0.40% and less than
|
0.60%
|
|
|
0.70%
|
|
0.60% and less than
|
0.80%
|
|
|
0.60%
|
|
0.80% and less than
|
1.00%
|
|
|
0.50%
|
|
1.00% and less than
|
1.20%
|
|
|
0.40%
|
|
1.20% and less than
|
1.30%
|
|
|
0.30%
|
|
1.30% and less than
|
1.40%
|
|
|
0.20%
|
|
1.40% and less than
|
1.50%
|
|
|
0.10%
|
|
1.50% and less than
|
1.60%
|
|
|
0.00%
|
|
1.60% and over
|
All contributing employers pay an “investment in South Dakota's future” fee. The fee rate for employers who are not eligible for an experience rate is 0.7% of taxable wages through calendar year 2006 and .55% on or after January 2007. The fee rate for experience-rated employers depends on the employer's reserve ratio. For 2006, employers with reserve ratios of less than 0.8% pay 0.7%; employers with reserve ratios of at least 0.8%, but less than 1.0%, pay 0.6%; employers with reserve ratios of at least 1.0%, but less than 1.2%, pay 0.5%; employers with reserve ratios of at least 1.2%, but less than 1.3%, pay 0.4%; employers with reserve ratios of at least 1.3%, but less than 1.4%, pay 0.3%; employers with reserve ratios of at least 1.4%, but less than 1.5%, pay 0.2%; employers with reserve ratios of at least 1.5%, but less than 1.6%, pay 0.1%; and employers with reserve ratios of 1.6% or more do not pay a fee.
If the fund balance is less than $11 million, each employer's rate is increased by 0.1% to 1.5%, depending on the exact amount in the fund, but no rate may be more than 10.5% as the result of such an increase.
Under conditions of favorable fund balance, interest earned by fund is credited annually to experience-rating accounts with positive balance.
A new construction employer pays 6.0% for the first year of liability and thereafter, if its account balance is positive, 3.0% until it qualifies for experience rating. The rate for new construction employers in 2006 is 6.7%, and the rate for new nonconstruction employers in 2006 is 1.9% (both rates include the investment in future fee).
Voluntary payments.- Permitted at any time, but to affect rates for the current year, must be made before February 1.
DEADLINES
Tax.- Contribution and wage report, Form DOL-UID-21, is due quarterly on or before 30th day of following month. If due date falls on Sunday or legal holiday, reports may be filed on following day. Reports postmarked before midnight of due date are deemed timely filed.
Wage.- Detailed quarterly wage reports are required on Form DOL-UID-21 (continuation sheet, DOL-UID-21-A), as noted above.
ENFORCEMENT
The South Dakota Employment Security Law is administered by the Unemployment Insurance Division of the Department of Labor.
If, after due notice, any employer defaults in any payment of contributions or interest thereon, the amount due may be collected by civil action in the name of the State. An employer adjudged in default must pay the costs of the action. Any other State has the right to sue in the courts of South Dakota for tax owing to it for unemployment insurance contributions, when a similar right is accorded South Dakota by such state. In any civil action to enforce the provisions of the law, the Department and the State may be represented by any qualified attorney employed by the Department or by the Attorney General.
Records.- The law provides that the Secretary, a representative of the Secretary, or the chairperson of an Appeal Tribunal may issue subpoenas to compel the attendance of witnesses and the production of records.
The Secretary may require from any employing unit any sworn or unsworn reports, with respect to persons employed by it, which it deems necessary for the effective administration of the law. The reports required are such as to enable the Secretary to determine which employers are liable for contributions, to verify the correctness of amounts paid as contributions by each employer, and to compute the amount and duration of benefits to which unemployed workers are entitled.
The information in the reports is confidential except to the extent necessary for the proper presentation of a claim, and must not be published or be open to inspection in any manner that reveals the individual's or employing unit's identity. Nor may any information submitted in connection with the requirements or administration of the law be made the basis for any action for slander or libel.
WHO TO CONTACT
The South Dakota Employment Security Law is administered by the Unemployment Insurance Division of the Department of Labor, 420 South Roosevelt St., P.O. Box 4730, Aberdeen, South Dakota 57402-4730; Telephone (605) 626-2329.
RECORDKEEPING
Every employing unit is required to keep true and accurate records, containing such information as the Secretary of Labor may prescribe, and to retain the same for a period of four years. Such records must be open to inspection at any reasonable time and as often as may be necessary.
These records should be kept by all employers of one or more workers in covered employment, regardless of whether they are liable for contributions or not. Otherwise the Department will be unable to ascertain liability in doubtful cases or to establish the amount of contributions payable by employers becoming newly subject to the law.
Since eligibility for benefits and duration of such payments depend upon total wages in certain specified numbers of quarters preceding unemployment, quarterly reports of each worker's wages must be made. For the purpose of determining which employer's account should be charged with benefits paid a given worker, the wage records must be supplemented by records on duration of employment. The employer should therefore keep records showing the date on which any worker was hired, rehired, or returned to work after temporary layoff, as well as the date when employment was terminated. The records should also show the cause of the termination of employment.
POSTING
Employers must post an Unemployment Insurance Notice to Employees which is mailed directly to covered employers by the Unemployment Insurance Division.
PENALTIES
Interest and penalties.- Contributions or payments in lieu of contributions unpaid on the due date bear interest at the rate of 1.5% per month or part of a month from and after such date until payment plus accrued interest is received by the Commissioner.
An additional penalty of $5 per month or part of a month may be assessed for failure to pay contributions or payments in lieu of contributions or submit required reports on time; however, the penalty for any one delinquent contribution or report may not exceed $30.
Any employing unit or officer or agent thereof or any other person who makes a false statement or representation knowing it to be false, or who knowingly fails to disclose a material fact, to avoid becoming or remaining subject to the law or to avoid or reduce any contribution or other payment required from an employing unit under the law or who willfully fails or refuses to make any such contributions or other payment or to furnish any reports required under the law or to produce or permit the inspection or copying of records as required thereunder, will be punished by a fine of not less than $20 nor more than $200 or by imprisonment for not longer than 60 days, or by both such fine and imprisonment. Each such false statement or representation or failure or refusal constitutes a separate offense. A similar penalty may apply should an employer perpetrate a misrepresentation to make an employee eligible for benefits or to raise the amount of his entitlement. Willful violation of any provision of the law or any rule or regulation thereunder, if no other specific penalty is prescribed, is similarly punishable. All criminal actions for such violations are prosecuted by or under the direction of the Attorney General of the State in the county wherein the violator has his place of business or residence.
Liens.- The law provides that where taxes and interest are unpaid, a lien may be filed by the Commissioner with the Register of Deeds of the County in which the employer resides. This lien is to be recorded in a book in the office of the Register of Deeds, showing the name of the employer, the name of the Employment Security Commissioner as lien claimant, the time the notice of lien was received, date of notice, amount of lien claimed, and the date it was satisfied. The filing of this lien gives notice to a purchaser of the business that the tax was unpaid and in the case of receivership or bankruptcy establishes the amount due from the employer in the way of unemployment compensation tax. It is not necessary that this lien be enforced at once, and in those cases where the employer evidences a desire to pay, but lacks the funds with which to pay the lien, it remains on file as a protection to the Commissioner. On the other hand, in those instances where an employer evidences bad faith and a desire to evade the payment of taxes, the law provides that a distress warrant may be issued to the sheriff requiring him to levy upon all of the property of the employer, except that which is exempt, and to sell the same in satisfaction of the lien. The law follows closely the lien provided for the collection of state income tax.
Bankruptcy.- In the event of any distribution of an employer's assets pursuant to an order of any court under the laws of the state, including any receivership, assignment for the benefit of creditors, adjudicated insolvency, composition, or similar proceedings, contributions then or thereafter due must be paid in full prior to all other claims except taxes and claims for wages of not more than $600 to each claimant, earned within six months of the commencement of the proceeding. In the event of an employer's adjudication in bankruptcy, judicially confirmed extension proposal, or composition, under the Federal Bankruptcy Act, contributions then or thereafter due are entitled to such priority as is provided in such Act.
<p>Bankruptcy.— In the event of any distribution of an employer's assets pursuant to an order of any court under the laws of the state, including any receivership,</p>
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