Employee Discipline: South Dakota
Federal law and guidance on this subject should be reviewed together with this section.
Author: Gloria Ju
- South Dakota is an employment at-will state that recognizes certain exceptions to the at-will doctrine. See Employment At-Will.
- Both state and federal law prohibit employers from disciplining employees based on protected characteristics, but there are two major differences between state and federal law. See Disciplining Employees in Protected Classes.
- Employers are prohibited from making retaliatory discipline decisions under numerous state laws. See Disciplining Employees in Protected Classes and Retaliation and Whistleblowing.
- Employees may not be disciplined for smoking off-duty or for engaging in political activities. See Lawful Behavior Outside of Work.
- Certain South Dakota employers ban the use of electronic cigarettes in the workplace. See E-Cigarettes.
- Employers must avoid making certain mistakes in disciplinary situations that can lead to legal liability, such as defamation, false imprisonment and illegal phone monitoring. See Discipline Considerations.
- When disciplining employees for attendance issues, employers must be aware of state jury duty and voting leave laws. See Specific Discipline Situations.
- Employers in South Dakota may use noncompete, nonsolicitation and nondisclosure agreements, but must be careful to abide by state and case law. See Specific Discipline Situations and Noncompete, Nonsolicitation and Nondisclosure Agreements.
- Employees owe a duty of loyalty to employers. An employer may have a cause of action for unfair competition, civil conspiracy or interference with a business relationship. See Specific Discipline Situations and Duty of Loyalty.
- South Dakota employers may ban guns in the workplace. See Guns in the Workplace.
- South Dakota has limited recordkeeping requirements. See Recordkeeping Requirements.
An employment having no specified term may be terminated at the will of either party on notice to the other, unless otherwise provided by statute. +S.D. Codified Laws § 60-4-4. Statutory exceptions to the at-will doctrine include:
- Discriminatory terminations based on a protected characteristic, e.g., sex, race or disability; and
- Retaliatory terminations for engaging in a protected activity, e.g., filing a discrimination complaint or workers' compensation claim.
An employment even for a specified term may be terminated at any time by the employer for:
- Habitual neglect of duty;
- Continued incapacity to perform;
- Any willful breach of duty by the employee in the course of employment;
- Misconduct in the course of service;
- Gross immorality, though unconnected with the misconduct; and
- Misconduct engaged in before or after employment began, that, if the employer had known about it, the employer would not have employed the employee.
In addition, employment may be terminated by the employee at any time for any willful or permanent breach of the obligations of the employer to the employee. +S.D. Codified Laws § 60-4-6.
The South Dakota Supreme Court recognizes a contract-based exception to the employment at-will doctrine if an employer adopts a personnel policy or manual explicitly providing that a for-cause termination procedure must be followed. See Butterfield v. Citibank of South Dakota, N.A., +437 N.W.2d 857, 859 (S.D. 1989). If an express or implied contract exists, and the employer does not follow the proper termination procedure, an employee may have a claim for wrongful termination. See Holland v. FEM Elec. Ass'n, +2001 SD 143 (2001).
Disciplining Employees in Protected Classes
South Dakota Human Relations Act
The South Dakota Human Relations Act (SDHRA) prohibits discrimination in employment based on:
- Sex, including pregnancy;
- Disability; and
- National origin.
The SDHRA does not cover age. However, individuals may be able to file suit under the federal Age Discrimination in Employment Act.
Prohibited discriminatory practices include:
- Failure or refusal to hire;
- Termination of employment; and
- Adverse or unequal treatment with respect to application, hiring, training, apprenticeship, tenure, promotion, upgrading, compensation, layoff or any term or condition of employment.
Unlike federal antidiscrimination laws, such as Title VII and the Americans with Disabilities Act, the SDHRA does not include a minimum employee threshold for employer coverage. The SDHRA applies to all employers, employment agencies and labor organizations, with limited exceptions. +S.D. Codified Laws § 20-13-1.
Retaliation and Whistleblowing
South Dakota Human Relations Act
The SDHRA prohibits employers from engaging in or threatening to engage in any reprisal, economic or otherwise, against any person who:
- Files a charge of discrimination; or
- Testifies, assists or participates in any way in an investigation, hearing or any other proceeding conducted by the South Dakota Division of Human Rights.
Wage and Hour Laws
No employer may retaliate against any employee because the employee has:
- Made any complaint to the employer, or to the Department of Labor and Regulation, that the employee has not been paid wages in accordance with South Dakota wage and hour laws;
- Made any complaint or is about to institute any proceedings; or
- Testified or is about to testify in any such proceedings.
Equal Pay Law
Employers may not threaten termination of employment, terminate employment or take other retaliatory action, for the purpose of dissuading an employee from giving information against the employer or testifying against the employer in an equal pay action. +S.D. Codified Laws § 60-12-21.
An employer may be held civilly liable for wrongful discharge if it terminates an employee in retaliation for filing a lawful workers' compensation claim. The burden of proof is on the employee to prove the termination was in retaliation for filing a workers' compensation claim. +S.D. Codified Laws § 62-1-16.
It is an unfair labor practice for public and private employers to terminate or otherwise discriminate against an employee because he or she has filed a complaint, affidavit or petition, or given any information or testimony under the collective bargaining statutes. +S.D. Codified Laws § 60-9A-12(4); +S.D. Codified Laws § 3-18-3.1.
A state employee may file a grievance with the Career Service Commission if the employee believes that there has been retaliation because the employee:
- Reported a violation of state law through the chain of command of the employee's department or to the attorney general's office; or
- Filed a suggestion under the law.
Lawful Behavior Outside of Work
Employers are prohibited from terminating an employee for engaging in any use of tobacco products off the employer's premises during nonworking hours unless such a restriction:
- Relates to a bona fide occupational requirement and is reasonably and rationally related to the employment activities and responsibilities of a particular employee or a particular group of employees, rather than to all employees of the employer; or
- Is necessary to avoid a conflict of interest with any responsibilities to the employer or the appearance of such a conflict of interest.
This law does not apply to full-time firefighters.
Smoking a tobacco product or carrying any lighted tobacco product in any public place or place of employment is a violation of law and punishable as a petty offense. +S.D. Codified Laws § 34-46-14.
Smoking prohibitions include electronic cigarettes and vaping. See E-Cigarettes.
South Dakota employers are prohibited from attempting to influence an employee's political activities, including threatening or coercing an employee to vote for a particular candidate. +S.D. Codified Laws § 12-26-13.
Effective July 1, 2019, South Dakota's smoking laws are amended to prohibit the smoking of vapor products, e.g., e-cigarettes, electronic smoking devices, in places where smoking tobacco products is prohibited, such as in public places and places of employment.
Specifically, the definition of tobacco product is expanded to include vapor products. In addition, smoking is defined as "the inhaling, exhaling, burning, or carrying any lighted or heated cigar, cigarette, pipe, hookah, or any other lighted or heated tobacco or plant product intended for inhalation, whether natural or synthetic, in any manner or in any form, including the use of an electronic smoking device which creates an aerosol or vapor, in any manner or in any form."
The amendment further defines electronic smoking devices as "any e-cigarette, e-cigar, e-pipe, e-hookah, or vape pen containing or delivering nicotine or any other substance intended for human consumption that may be used by a person in any manner for the purpose of inhaling vapor or aerosol from the product."
The term tobacco product includes vapor product, which falls under the amendment, does not include any product approved by the US Food and Drug Administration for sale as tobacco cessation products and marketed and sold solely for that purpose. +S.D. Codified Laws § 34-46-20, as amended by +2019 Bill Text SD H.B. 1209.
In addition, the South Dakota Department of Corrections bans the use of electronic cigarettes by its staff and on its buildings and grounds.
South Dakota statutory law prohibits defamation. Defamation includes libel or slander that tends to injure a person in his or her occupation or business. +S.D. Codified Laws § 20-11-1; +S.D. Codified Laws § 20-11-2; +S.D. Codified Laws § 20-11-3; +S.D. Codified Laws § 20-11-4.
Certain communications are privileged and may not be used as a basis for a defamation claim under South Dakota law, such as oral or written communications related to state unemployment insurance proceedings. +S.D. Codified Laws § 61-3-5.
South Dakota law prohibits false imprisonment, i.e., any person to knowingly and purposely restrain another person so as to substantially interfere with his or her liberty. +S.D. Codified Laws § 22-19-17. False imprisonment is a crime in South Dakota.
Monitoring and Surveillance
Although not workplace-specific, South Dakota law prohibits eavesdropping on or recording telephone or telegraph conversations or discussions without the consent of a party to the conversation or discussion. +S.D. Codified Laws § 23A-35A-20(2).
Specific Discipline Situations
Employees may not be terminated or suspended for serving as a juror in any court in the state. +S.D. Codified Laws § 16-13-41.1.
Time Off to Vote
On the day of any election held within the state, employees are entitled to be absent from work for two consecutive hours between the time the polls open and close in order to vote, if the employee does not have a two-hour period off from work during the time the polls are open. The employer may specify the hours during which employees may be absent to vote. Employees who take time off from work to vote cannot be subject to any penalty or have any deduction made from their usual salary or wages due to the absence. +S.D. Codified Laws § 12-3-5.
South Dakota adopted the Uniform Trade Secrets Act. S.D. Codified Laws § 37-29-1 et seq.
Noncompete, Nonsolicitation and Nondisclosure Agreements
Any contract restraining exercise of a lawful profession, trade or business is void. +S.D. Codified Laws § 53-9-8. However, an employee may agree with an employer at the time of employment or at any time during employment not to:
- Engage directly or indirectly in the same business or profession as that of the employer for up to two years from the date of termination of employment; and
- Solicit existing customers of the employer within a specified county, first or second class municipality or other specified area for up to two years from the date of termination.
Similar covenants apply to independent contractors who are captive insurance agents. +S.D. Codified Laws § 53-9-12.
South Dakota law also allows for any person who sells the good will of a business to agree with the buyer to refrain from carrying on a similar business within a specified county, city or other specified area, as long as the buyer or person deriving title to the good will from the seller carries on a like business within the specified geographical area. +S.D. Codified Laws § 53-9-9.
Finally, partners may, upon or in anticipation of a dissolution of the partnership, agree that none of them will carry on a similar business within the same municipality where the partnership business has been transacted. +S.D. Codified Laws § 53-9-10.
The South Dakota Supreme Court has recognized that nondisclosure agreements are not anticompetitive. See 1st Am. Sys. v. Rezatto, +311 N.W.2d 51, 57 (S.D. 1981). However, nondisclosure agreements are unenforceable if:
- A trade secret or confidential relationship does not exist;
- The employer discloses the information to others not in a confidential relationship; or
- The information is legitimately discovered and openly used by others.
South Dakota courts adopt the blue pencil doctrine. The reasonableness of each provision is the benchmark for partial enforcement, which means:
- Being no greater than required for the protection of the employer;
- Not imposing undue hardship on the employee; and
- Not being injurious to the public.
See 1st Am. Sys. v. Rezatto, +311 N.W.2d 51 (S.D. 1981). This test can be applied to duration, area limitations and range of activities.
If an employee voluntarily quits or is fired for good cause, no further showing of the reasonableness of a noncompete or nondisclosure agreement is necessary as long as the agreement complies with South Dakota statutory requirements. See +S.D. Codified Laws § 53-9-11; Central Monitoring Serv. v. Zakinski, +1996 SD 116 (1996). However, if an employee is fired for no fault of his or her own, reasonableness must be determined. Courts must generally consider the following:
- The extent of the restraint, including its territorial scope and duration; and
- The nature of the business or profession involved, including the employee's position and duties and the public's interests in the employee being able to continue in that field.
Duty of Loyalty
An employee who has any business to transact on the employee's own account owes a duty of loyalty to his or her employer. +S.D. Codified Laws § 60-2-13. Although this provision does not keep employees from pursuing their own interests, employees are required to prioritize their employers' business interests to their own. Bushman v. Pure Plant Food Int'l, +330 N.W.2d 762, 763-64 (S.D. 1983).
Duty of loyalty claims are extremely fact-sensitive. Setliff v. Akins, +2000 SD 124 (S.D. Sept. 6, 2000). On the one hand, employees owe a duty of loyalty to their employer and must not, while employed, act contrary to the employer's interests. On the other hand, employees are entitled to take limited steps to begin competing with their employers. Employees who go too far risk violating their duty of loyalty, such as:
- By soliciting customers for the rival business before the end of their employment; or
- By engaging in other similar acts in direct competition with their employer.
An employer may prove a claim of civil conspiracy by showing:
- Two or more persons;
- An object to be accomplished;
- A meeting of the minds on the object or course of action to be taken;
- The commission of one or more unlawful overt acts; and
- Damages as the proximate result of the conspiracy.
Setliff v. Akins, +2000 SD 124 (S.D. Sept. 6, 2000).
Interference With Business Relations
An employer may prove a claim for interference with business relations by showing:
- The existence of a valid business relationship or expectancy;
- Knowledge by the interferer of the relationship or expectancy;
- An intentional and unjustified act of interference on the part of the interferer;
- Proof that the interference caused the harm sustained; and
- Damage to the party whose relationship or expectancy was disrupted.
Setliff v. Akins, +2000 SD 124 (S.D. Sept. 6, 2000).
None of these elements require the existence of an express employment contract.
Guns in the Workplace
South Dakota has enacted no law prohibiting employers from banning employees from carrying guns in the workplace.
South Dakota law does not require a permit for any person who possesses a pistol or revolver in his or her own place of business. +S.D. Codified Laws § 22-14-11.
Under the state's equal pay law, employers with more than 25 employees must make, keep and maintain the following records for each employee, and preserve the records for a reasonable period of time:
- Wage and wage rates;
- Job classifications; and
- Other terms and conditions of employment.
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