Thanks to remote work, the hiring landscape has changed. Employers can retain their top talent, even when they move out of state or when hiring out of state employees in South Dakota. Employees are free to enjoy the convenience and flexibility however they choose. It’s a win-win situation—except for the out-of-state hiring process.
Whether your employees are moving out of state or you’re hiring a brand-new worker living in South Dakota, complex multistate questions can arise. Every state has different employment laws and standards, which can significantly vary. Employers must ensure that they’re in compliance with each new state’s regulations, or risk hefty fines and penalties from the Department of Labor.
Onboarding out-of-state employees can be complicated, frustrating and time-consuming. To simplify the process, SixFifty has created multistate employer tools to cut down time and cost required. Here’s an overview of the South Dakota out-of-state hiring process.
Scenario 1: Employee works from home in another state
Instead of seeking new employment after a move, employees are now free to work from home in another state. Whether they need to move closer to family, follow a partner’s employment or simply want to explore a new state, they can keep their jobs. However, South Dakota’s employment laws will now govern that employee—even if you’re headquartered in Oregon. Employers must ensure their policies, taxes and insurance coverage is compatible.
Scenario 2: Hiring out-of-state employees in South Dakota
Remote work opens up a significantly larger talent pool for employers. Nationwide job searches allow companies to select the right workers from a much broader search. Your company may wish to hire someone already living in South Dakota. Again, even when the company is headquartered in another state, South Dakota’s employment laws and protections apply to that employee. As you bring the new worker on board, you’ll need to ensure that your policies comply with South Dakota law.
Multistate Employer Registration Factors to Consider
When you hire an out-of-state employee or a current employee moves away, it’s your responsibility to know and comply with employment laws. Depending on where your company is located, your home state’s laws may look very different from South Dakota’s. This can open companies up to liability, including fines and penalties from government agencies.
SixFifty has identified five core areas of focus for multistate employers. Our tools allow employers to quickly onboard new out-of-state employees.
1. South Dakota Employment Registration
The first step in out-of-state hiring is to create an economic nexus with the new state. Your company must register to do business in South Dakota, report your new hire to the state within 20 days, and register for or update unemployment and workers’ compensation insurance policies.
- Obtain a registered agent
- Register to do business in South Dakota
- Report new hire to the Department of Labor and Regulation
- Register for unemployment insurance
- Report unemployment insurance account to payroll provider
- Obtain workers’ compensation coverage or update the policy
2. South Dakota Tax Registration
When your company hires out of state, you have tax obligations to the new state. You will need to register for an income tax withholding account, fill out and file a new withholding form from your employee and register for a sales tax license or permit.
- Register for income tax withholding account
- Register for a sales tax license or permit
3. South Dakota Employment Policies
South Dakota has three mandatory, state-specific employment policies which must be included in your employee handbook. All three policies involve various types of leave, including jury duty leave. Employers should review their existing policies for conflicts, then add or update their employee handbook as necessary.
- Review employee handbook for compliance
- Update policies or add new leave policies as needed
4. South Dakota Employment Implications
Next, you must consider South Dakota’s employment implications. For instance, South Dakota has a strict two-year limit on non-compete clauses. Employers should also review their wage (minimum wage is $9.95 per hour), overtime and payroll policies, insurance coverage and any conflicting COVID-19 laws which could affect the out-of-state employee.
- Ensure non-compete provisions comply with South Dakota law
- Confirm the employee is paid at least the minimum wage
- Review the applicable overtime laws
- Confirm the payroll practices meet the payment frequency standards in South Dakota
- Consider whether insurance extends coverage to employees in South Dakota
- Consider COVID-19 laws that affect the employee
5. South Dakota Signage
Finally, South Dakota requires employers to post or distribute four different types of employment signage. The state has not deemed how to do so for exclusively remote workers. Generally, posting the signage on the company website, in an easily accessible web folder or on company intranet and communication channels should satisfy this requirement.
- Post or distribute required signage
Simplify Multistate Compliance with SixFifty
The process of maintaining compliance can be complex and extremely nuanced for companies unfamiliar with South Dakota employment laws and standards. It’s why SixFifty has compiled an extremely useful tool for businesses hiring out-of-state employees in South Dakota. To simplify the process of hiring out-of-state employees in South Dakota or supporting remote employees on-the-move, check out our 50 State Hiring Kit.
Written by Meili Bell
Meili Bell is the Content Manager at SixFifty. She spends her workdays writing, editing, project managing and reading about the intersection of law and technology. Meili comes to SixFifty from Gifted Music School, a nonprofit music school for the most dedicated young musicians in the region, where she was program director of the school’s flagship program for the last ten...
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