This note addresses employee expense reimbursement in South Dakota. It covers necessary job costs, statutory exceptions, remote work, agreements, and the federal wage floor. For broader context, see the expense reimbursement practice guide.
Must an employer in South Dakota reimburse employee business expenses?
South Dakota requires an employer to cover what an employee necessarily spends or loses as a direct consequence of performing job duties or following employer directions, subject to the statutory exception. The statute does not make advance authorization a condition of this duty.
Sources for this answer
South Dakota's § 60-2-1 requires an employer to indemnify an employee for necessary expenditures or losses directly caused by job duties or employer directions, subject to § 60-2-2.
An employer shall indemnify an employee, except as provided in § 60-2-2 for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties, or of the employee's obedience to the direction of the employer, even though unlawful, unless the employee at the time of obeying such directions believed such directions to be unlawful.
See S.D. Codified Laws § 60-2-1
Which business expenses must a South Dakota employer reimburse?
South Dakota's rule covers necessary expenditures and losses directly caused by an employee's duties or obedience to employer directions. The employer need not cover losses from ordinary business risks or a coworker's negligence, unless it failed to use ordinary care in selecting that coworker.
Sources for this answer
South Dakota's § 60-2-1 covers necessary expenditures and losses directly caused by job duties or employer directions.
An employer shall indemnify an employee, except as provided in § 60-2-2 for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties, or of the employee's obedience to the direction of the employer, even though unlawful, unless the employee at the time of obeying such directions believed such directions to be unlawful.
See S.D. Codified Laws § 60-2-1
South Dakota's § 60-2-2 excludes losses from ordinary business risks and coworker negligence, with an exception for negligent selection of the coworker.
An employer, except as otherwise specially provided, is not bound to indemnify an employee for losses suffered by the employee in consequence of the ordinary risks of the business in which employed, nor in consequence of the negligence of another person employed by the same employer in the same general business, unless the employer has neglected to use ordinary care in the selection of the culpable employee.
See S.D. Codified Laws § 60-2-2
Must a South Dakota employer reimburse remote-work costs such as home internet or a personal phone?
South Dakota's necessary-expense rule can cover remote-work costs when they are necessary and directly caused by job duties or employer directions. Section 60-2-1 does not name home internet, personal phones, or remote work. No reported decision on remote-work costs was found in our review, so whether a particular cost qualifies depends on the statutory necessity and direct-consequence tests.
Sources for this answer
South Dakota's § 60-2-1 covers necessary expenditures directly caused by job duties or employer directions.
An employer shall indemnify an employee, except as provided in § 60-2-2 for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties, or of the employee's obedience to the direction of the employer, even though unlawful, unless the employee at the time of obeying such directions believed such directions to be unlawful.
See S.D. Codified Laws § 60-2-1
Can an offer letter or expense policy in South Dakota make the employee bear business expenses?
South Dakota's indemnity statutes do not address whether an offer letter, policy, or agreement can waive the employer's duty to cover necessary job expenses. A policy assigning those expenses to the employee therefore risks conflicting with the statutory duty. The text supplies no express waiver exception.
Sources for this answer
South Dakota's § 60-2-1 imposes an employer indemnity duty for necessary job expenditures and losses, subject to § 60-2-2.
An employer shall indemnify an employee, except as provided in § 60-2-2 for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties, or of the employee's obedience to the direction of the employer, even though unlawful, unless the employee at the time of obeying such directions believed such directions to be unlawful.
See S.D. Codified Laws § 60-2-1
South Dakota's § 60-2-2 excludes specified employee losses from the employer's indemnity duty.
An employer, except as otherwise specially provided, is not bound to indemnify an employee for losses suffered by the employee in consequence of the ordinary risks of the business in which employed, nor in consequence of the negligence of another person employed by the same employer in the same general business, unless the employer has neglected to use ordinary care in the selection of the culpable employee.
See S.D. Codified Laws § 60-2-2
How does federal minimum-wage law limit unreimbursed expenses in South Dakota?
Under 29 C.F.R. § 531.35, an employer that requires an employee to supply tools of the trade for the job violates the Fair Labor Standards Act in any workweek in which the employee's cost cuts into the minimum or overtime wages due. The regulation rests on the rule that wages count as paid only when they are paid free and clear, with no kick-back to the employer. On a touch screen, a tap shows all 2 sources in this group.
The federal rule is a floor, not a general duty to reimburse. It is breached only when an employer-required cost pushes the week's pay below the minimum or overtime wages due.
Sources for this answer
29 C.F.R. § 531.35 states that when an employer requires an employee to provide tools of the trade for the employer's work, the Fair Labor Standards Act is violated in any workweek in which the employee's cost of those tools cuts into the minimum or overtime wages required under the Act.
For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act.
See 29 C.F.R. § 531.35
29 C.F.R. § 531.35 states that wages are not considered paid unless they are paid finally and unconditionally, or free and clear.
Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.”
See 29 C.F.R. § 531.35
29 C.F.R. § 531.35 states that the Fair Labor Standards Act's wage requirements are not met when an employee kicks back all or part of the wage to the employer or to another person for the employer's benefit.
The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee.
See 29 C.F.R. § 531.35