# Employee Expense Reimbursement in South Dakota[^about] South Dakota's employee indemnity statutes cover necessary job expenses, exclude certain losses, and leave remote-work costs and waiver unaddressed expressly. 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](/practice-guides/expense-reimbursement). ## Must an employer in South Dakota reimburse employee business expenses? {#reimbursement-duty} **Short answer.** 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. [^sdcl-60-2-1-indemnify-necessary-expenses] The statute does not make advance authorization a condition of this duty. [^sdcl-60-2-1-indemnify-necessary-expenses] ## Which business expenses must a South Dakota employer reimburse? {#covered-expenses} **Short answer.** South Dakota's rule covers necessary expenditures and losses directly caused by an employee's duties or obedience to employer directions. [^sdcl-60-2-1-covered-necessary-expenses] 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. [^sdcl-60-2-2-ordinary-risk-exclusions] ## Must a South Dakota employer reimburse remote-work costs such as home internet or a personal phone? {#remote-work-costs} **Short answer.** South Dakota's necessary-expense rule can cover remote-work costs when they are necessary and directly caused by job duties or employer directions. [^sdcl-60-2-1-remote-costs-if-necessary] Section 60-2-1 does not name home internet, personal phones, or remote work. [^sdcl-60-2-1-remote-costs-if-necessary] 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. [^sdcl-60-2-1-remote-costs-if-necessary] ## Can an offer letter or expense policy in South Dakota make the employee bear business expenses? {#waiver} **Short answer.** 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. [^sd-waiver-duty] [^sd-waiver-exception] A policy assigning those expenses to the employee therefore risks conflicting with the statutory duty. The text supplies no express waiver exception. [^sd-waiver-duty] ## How does federal minimum-wage law limit unreimbursed expenses in South Dakota? {#federal-floor} **Short answer.** 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. [^fed-531-35-tools] 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. [^fed-531-35-free-and-clear][^fed-531-35-kickback] 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. [^fed-531-35-tools] [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-30. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not South Dakota. This article synthesizes South Dakota primary law and is not legal advice from a South Dakota-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *Employee Expense Reimbursement in South Dakota*, OpenAgreements (last updated September 30, 2026), https://openagreements.org/practice-guides/expense-reimbursement/us/south-dakota. [^sdcl-60-2-1-indemnify-necessary-expenses]: **S.D. Codified Laws § 60-2-1** — "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." *S.D. Codified Laws § 60-2-1* [^sdcl-60-2-1-covered-necessary-expenses]: **S.D. Codified Laws § 60-2-1** — "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." *S.D. Codified Laws § 60-2-1* [^sdcl-60-2-2-ordinary-risk-exclusions]: **S.D. Codified Laws § 60-2-2** — "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." *S.D. Codified Laws § 60-2-2* [^sdcl-60-2-1-remote-costs-if-necessary]: **S.D. Codified Laws § 60-2-1** — "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." *S.D. Codified Laws § 60-2-1* [^sd-waiver-duty]: **S.D. Codified Laws § 60-2-1** — "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." *S.D. Codified Laws § 60-2-1* [^sd-waiver-exception]: **S.D. Codified Laws § 60-2-2** — "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." *S.D. Codified Laws § 60-2-2* [^fed-531-35-tools]: **29 C.F.R. § 531.35** — "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." *29 C.F.R. § 531.35* [^fed-531-35-free-and-clear]: **29 C.F.R. § 531.35** — "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.’" *29 C.F.R. § 531.35* [^fed-531-35-kickback]: **29 C.F.R. § 531.35** — "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." *29 C.F.R. § 531.35* For repeat use, install the skill: `npx skills add open-agreements/open-agreements` (lawyer-reviewed agreement templates + 50-state practice guides).