South Dakota Minimum Wage: Rates and Rules for Employers
South Dakota pays $11.85 an hour and $5.925 to tipped staff. Here is the CPI indexing schedule, every exemption, and what to change when the rate rises.
South Dakota Minimum Wage
One statewide rate, a 50 percent tipped floor, and an automatic January increase you can plan for months in advance
Every January I get the same message from someone running a restaurant or a shop in Sioux Falls: the state minimum wage moved again, and nobody told them. Somebody did tell them. South Dakota publishes the new number in October, but an October announcement lands months before anyone is thinking about January payroll, and by the time payroll runs on January 3 the old rate is still sitting in the system.
South Dakota is one of the easier states to get this right, because there is exactly one rate and it applies everywhere. There is no city rate, no county rate, no fast food council, and no separate schedule for small employers. Instead, an index moves the number a little every year without any vote in Pierre, and that is a different kind of trap: nothing happens to remind you.
This page gives you the rate, the schedule, the tipped wage, the handful of exemptions that actually exist, and the steps to take when the number changes, all sourced from the Department of Labor and Regulation. Read it once and the January change stops catching you by surprise.
The Current Rate
The South Dakota minimum wage is $11.85 per hour, effective January 1, 2026. It replaced the $11.50 rate that ran through 2025, and the Department of Labor and Regulation announced the change in a news release dated October 23, 2025.
The rate itself lives in South Dakota Codified Laws (SDCL) 60-11-3, and the annual adjustment lives in SDCL 60-11-3.2. Both are published by the state on the Department of Labor and Regulation minimum wage page, which is the page to check before you set a new hire's pay.
The enforcement side is short and worth knowing. Violating the minimum wage section is a Class 2 misdemeanor, which makes underpayment a crime and not only a pay dispute. An employee paid less than the minimum can recover the full amount measured by the minimum wage plus costs, and any agreement to work for less is ineffective under SDCL 60-11-4.
Damages climb for the worst conduct. Where a private employer has been oppressive, fraudulent, or malicious in refusing to pay wages due, SDCL 60-11-7 sets damages at double the wages owed.
The recent rate history
Each of these figures comes from the department's own announcement for that year. The tipped cash wage is always half the standard rate, which is why it lands on a half cent in 2026.
| Effective date | Standard rate | Tipped cash wage | Increase |
|---|---|---|---|
| Jan. 1, 2024 | $11.20 | $5.60 | 40 cents |
| Jan. 1, 2025 | $11.50 | $5.75 | 30 cents |
| Jan. 1, 2026 | $11.85 | $5.925 | 35 cents |
Before this run, the rate was $10.80 per hour for 2023. Indexing has applied every January since the first adjustment on January 1, 2016, under the cost-of-living clause voters adopted with Initiated Measure 18 in 2014, and the statute forbids a decrease, so the number only ever moves up or holds flat.
The Next Scheduled Increase
The next increase takes effect January 1, 2027, and the amount is not yet public. As of the last check on September 26, 2026, the Department of Labor and Regulation had not published a 2027 rate, so treat any figure quoted before its announcement as an estimate.
The timing is fixed by statute rather than by a legislative session. SDCL 60-11-3.2 requires the Secretary of the Department of Labor and Regulation, or a designee, to publish the adjusted rate on the department's internet home page by October 15 of each year, effective the following January 1. That deadline gives every South Dakota employer roughly two and a half months of notice.
The formula is equally mechanical. The adjustment tracks the Consumer Price Index for all urban consumers, U.S. city average, all items. The department takes the index's percentage increase over the twelve months ending the August before the new rate starts, applies it to the current rate, and rounds up to the nearest five cents. If the index is flat or falls, the rate stays put.
Tipped Employees and the Tip Credit
South Dakota lets employers use tips to cover up to 50 percent of the minimum wage, a tip credit that puts the tipped cash wage at $5.925 per hour as of January 1, 2026. An employer who claims the credit must pay at least that cash wage directly, and wages plus tips must reach $11.85 for every hour worked.
If tips fall short in a given pay period, SDCL 60-11-3.1 requires the employer to make up the difference as additional wages for that period. The test runs pay period by pay period, not year to date, so a slow February does not get averaged against a busy July. The department also expects employers claiming the credit to keep a record of all tips employees receive.
A tipped employee, under the same section, is someone engaged in an occupation in which the employee customarily and regularly receives more than $35 a month in tips or other considerations. That threshold is a monthly test tied to the job, not a preference the employee opts into.
City and County Rates
There are no city or county minimum wages in South Dakota. The state publishes one rate that applies statewide, and no South Dakota municipality or county has added a minimum wage of its own on top of it.
That means an employer in Sioux Falls, Rapid City, Aberdeen, Brookings, or Watertown pays $11.85 per hour, the same as an employer in a town of 400. If you run two locations on opposite ends of the state, you still have one number in payroll. It also means the local ordinance lookup that eats an afternoon in other states is a non-event here.
One honest caveat: nothing in South Dakota Title 60 (the labor and employment title of the state code) expressly bars a city from setting its own wage floor. So this describes what exists today, not a permanent guarantee. For now, neither the state labor code nor the department guidance points to a local rate anywhere in South Dakota.
Exemptions and Industry Carve-Outs
South Dakota has no industry-specific minimum wage. There is no fast food rate, no healthcare rate, and no agricultural carve-out in the state statute. The exemptions that exist are narrow, listed in full in the statute, and mostly older than the indexing law.
| Who is exempt | Statute | What that means in practice |
|---|---|---|
| Employees under 20 on the opportunity wage | SDCL 60-11-4.1 | $4.25 per hour for the first 90 consecutive calendar days of employment |
| Babysitters | SDCL 60-11-3 | Excluded from both the standard rate and the tipped wage rules |
| Outside salespersons | SDCL 60-11-3 | Excluded from both the standard rate and the tipped wage rules |
| Seasonal amusement or recreational establishments | SDCL 60-11-3 | Applies if the business runs seven months or less in the year, or if six months of receipts were no more than one third of the other six |
| Organized camps and religious or nonprofit educational conference centers | SDCL 60-11-3 | Same seven month or receipts test as amusement and recreation businesses |
| Apprentices and people learning the business | SDCL 60-11-5 | A narrow exemption; do not stretch it to cover ordinary new hires |
| A person with a developmental disability | SDCL 60-11-5 | Only where the department has issued a permit fixing the wage for that person |
| Independent contractors | Not employees | The minimum wage law does not reach genuine contractors, but misclassification does not create an exemption |
Two of these deserve a warning. The apprentice and learner exemption is not a probationary rate for new staff, and treating it that way is how underpayment claims start. The seasonal exemption turns on the statute's operating and receipts tests: a business that runs eight months fails the operating test, however seasonal it feels, and can qualify only on its receipts.
Agriculture is the one worth stating in the positive. Farm and ranch employees are not on the exemption list, so the state rate applies to them even in situations where a federal agricultural exemption would otherwise be in play. The full statutory text sits in the department's South Dakota labor and employment laws booklet.
Youth and Training Wage
South Dakota has no state youth or training wage of its own. What it has is the federal opportunity wage, adopted into state law by SDCL 60-11-4.1: an employee under the age of 20 may be paid no less than $4.25 an hour during the first 90 consecutive calendar days after that person is first employed.
The department confirms two limits in its state minimum wage FAQ. First, employers may not displace existing employees in order to hire someone at the opportunity wage. Second, the 90 day window runs on consecutive calendar days from the first day of employment, not on days actually worked, so a summer hire who works weekends only still burns the clock seven days a week.
On day 91, or the day the employee turns 20, whichever comes first, the full state minimum applies. Put the step-up date in the record at hire rather than trusting anyone to notice it later. That is the kind of dated obligation FirstHR is built to surface, alongside the rest of a new hire's paperwork.
The Poster Requirement
South Dakota does not require a state minimum wage poster. The Department of Labor and Regulation says directly that no state statute requires the state minimum wage posting, and that it provides the poster as a courtesy and for informational purposes only.
State law requires only two workplace postings, both listed on the department posting requirements page: the Reemployment Assistance employee notification, which tells workers about unemployment benefits and must also be given to each worker individually at separation, and a safety posting required by workers compensation law.
Federal postings are a separate stack, and the Fair Labor Standards Act poster is required at covered workplaces by federal law.
My advice is to display the state minimum wage sheet anyway, even though state law does not require it. It is free to download from the department, and a current rate on the break room wall settles more pay questions than any policy document. Swap it in January when the new one is posted.
How the State Rate Meets the Federal Floor
South Dakota's $11.85 sits well above the federal minimum wage of $7.25, which has not moved since 2009. Where an employee is covered by both laws, the department states the rule plainly: the employee is entitled to the higher rate. In South Dakota that is always the state rate.
The same logic runs through the tipped wage. South Dakota's 50 percent floor produces a cash wage far above the federal tipped cash minimum of $2.13, so the state figure governs.
The one place federal law still does the work is overtime. South Dakota adds nothing to the Fair Labor Standards Act on overtime pay, so time and a half after 40 hours in a workweek is a federal calculation performed on a state pay rate.
What to Do When the Rate Rises
A South Dakota rate change is a payroll task, not a legal project, and it takes about an hour if you work through it in order. The statute calls for the number by October 15 for a January 1 effective date, so nothing here needs to happen in a rush.
Keep the arithmetic behind each January change where you can find it later. Wage claims arrive long after the fact, and a saved calculation is worth more than a memory.
FirstHR is an onboarding and HR platform, not a payroll provider. What it does hold is the employee record the rate change touches: who is hourly, who is still inside a 90 day opportunity wage window, and who has acknowledged the notice.
Frequently Asked Questions
What is the minimum wage in South Dakota?
Employers in South Dakota must pay covered employees at least $11.85 per hour, effective January 1, 2026. That figure replaced the old $11.50 per hour rate, and the Department of Labor and Regulation announced the increase in October 2025. Section 60-11-3 of the South Dakota Codified Laws (SDCL) sets the rate, and SDCL 60-11-3.2, the indexing statute, adjusts it each January by the August over August change in the Consumer Price Index for all urban consumers, rounded up to the nearest five cents. Because the law bars any decrease, a year with a flat or falling index leaves the rate unchanged. Underpaying is a Class 2 misdemeanor, and a worker who was shorted can recover the full amount owed plus costs, even after agreeing to accept less.
What is the tipped minimum wage in South Dakota?
Tipped workers in South Dakota must be paid a cash wage of no less than $5.925 per hour, effective January 1, 2026. Employers can count tips toward the rest, but only up to 50 percent of the state minimum, so the cash floor is exactly half the state rate; that ceiling is set in SDCL 60-11-3.1. Once tips are added, total pay has to hit $11.85 per hour, and the employer covers any gap in a pay period with extra wages. A tipped employee is anyone whose occupation customarily and regularly brings in more than $35 a month in tips or other considerations. Employers who take the tip credit are also expected by the department to keep records of every tip their staff receive.
Does any South Dakota city have its own minimum wage?
No. South Dakota sets a single minimum wage for the whole state, and no city or county has adopted a separate one. The Department of Labor and Regulation publishes that one figure, and it binds every employer, whether the business sits in Sioux Falls, Rapid City, Aberdeen, Brookings, Watertown, or the smallest rural town. All of them pay $11.85 per hour. For payroll, that is a real advantage over states where one pay run has to be divided along city lines. A business with several locations inside South Dakota keeps track of just one number, and any change to it comes once a year, each January.
When does the South Dakota minimum wage go up next?
The next increase arrives on January 1, 2027. As of September 26, 2026, the Department of Labor and Regulation had not announced the new amount, so any 2027 number circulating before that announcement is someone’s projection, not the legal rate. Under SDCL 60-11-3.2 the department’s Secretary must post the adjusted rate by October 15 each year, which on the statutory schedule leaves employers about two and a half months to prepare. The size of the raise follows the Consumer Price Index for all urban consumers, compared August to August: the percentage change is applied to $11.85 and the result is rounded up to the nearest five cents. The last three raises were 40 cents, 30 cents, and 35 cents.
Can I pay a teenager less than minimum wage in South Dakota?
Yes, but only in one narrow situation. South Dakota borrows the federal opportunity wage through SDCL 60-11-4.1: a worker younger than 20 can start at a floor of $4.25 an hour, and that lower rate lasts for the first 90 consecutive calendar days of the job. Weekends and days off count toward the window, so a part-time or seasonal hire uses it up faster than you might expect. The full state minimum takes over on day 91, or on the employee’s 20th birthday if that comes sooner. Employers are also barred from pushing out existing staff to make room for an opportunity wage hire. Beyond this federal provision, the state has no youth or student wage of its own.
Do I have to post a minimum wage poster in South Dakota?
Not under state law. According to the Department of Labor and Regulation, no South Dakota statute makes the state minimum wage poster mandatory; the department offers it as a courtesy. State law calls for just two workplace notices: the Reemployment Assistance employee notification, which tells workers about unemployment benefits, and the safety notice that workers compensation law demands. Federal law works differently. The Fair Labor Standards Act poster has to be displayed at covered workplaces, so a covered employer still has a minimum wage notice to put up, just a federal one. Most employers hang the state sheet as well, because a posted current rate heads off pay disputes and replacing it each January takes two minutes.
Does the South Dakota minimum wage apply to farm and ranch workers?
Yes. The state minimum wage law spells out every exemption, and agriculture is not one of them. Under SDCL 60-11-3 the exclusions cover babysitters, outside salespersons, workers on the opportunity wage, and certain seasonal amusement or recreational establishments, organized camps, and religious or nonprofit educational conference centers. SDCL 60-11-5 then exempts apprentices, people learning the business, and a person with a developmental disability who works under a department-issued permit. Neither section says anything about farm or ranch work. A South Dakota farm or ranch therefore owes its employees the state rate, even in cases where a federal agricultural exemption could otherwise have applied.