Guide to Firing Employees in South Dakota for Employers

September 5th 2024

Firing an employee is a significant decision that can impact your business and the individual involved. In South Dakota, the termination process is governed by both state and federal laws designed to ensure fairness and protect against wrongful termination. This guide provides employers in South Dakota with a comprehensive understanding of the process, including legal considerations, best practices, and steps to take for a respectful termination.

This Guide Covers

What Does Firing an Employee in South Dakota Involve?
Differentiating between Firing, Layoffs, and Resignations in South Dakota
Why the Termination Process Matters in South Dakota
Termination Laws in South Dakota: What You Need to Know
Legal Implications of Wrongful Termination in South Dakota
Required Documents for Employers and Terminated Employees in South Dakota
Who is Responsible for Terminating in South Dakota?
How Long Should the Termination Process Last in South Dakota?
How Can You Prepare for Termination in South Dakota?
Steps for a Respectful Termination Process in South Dakota
Post-Termination: What Happens Next?
Legal Considerations During Termination in South Dakota
Bonus: Best Practices for Reducing Litigation Risks in South Dakota

What Does Firing an Employee in South Dakota Involve?

Firing an employee involves ending an individual’s employment contract with your company. The reasons can vary from performance issues and misconduct to redundancy or company downsizing.

The process in South Dakota, as in other states, requires careful consideration of both federal and state-specific labor laws to ensure the termination process is handled legally and ethically. As most states do, South Dakota employs the “at-will” employment doctrine, allowing either the employer or employee to terminate the employment relationship at any time for any reason. This provides employers with considerable flexibility in managing their workforce. However, exceptions include terminations based on discrimination, retaliation, or violation of public policy.

South Dakota employers must also be aware of specific state legislation that can affect the firing process. For example, the South Dakota Department of Labor & Regulation provides guidelines on what constitutes wrongful termination, emphasizing protections against firing due to jury duty participation, military service, and filing for workers’ compensation. Employers need to familiarize themselves with these regulations to avoid potential legal complications.

For comprehensive details on general employment standards, explore our South Dakota Labor Laws article.

Differentiating between Firing, Layoffs, and Resignations in South Dakota

Firing in South Dakota

In South Dakota, firing, also known as termination for cause, occurs when an employer decides to dismiss an employee due to the employee’s actions or performance. This can include non-compliance with company policies, poor performance, unethical behavior, or other misconduct. Despite following the ‘at-will’ employment doctrine, employers are encouraged to maintain documentation supporting their decision to protect against potential wrongful termination claims.

Layoffs in South Dakota

Layoffs occur when a company needs to reduce its workforce due to economic reasons, such as financial struggles, a decrease in demand for the company’s products or services, or organizational restructuring. Layoffs are not a reflection of employee performance. In South Dakota, employers conducting layoffs may be subject to the Worker Adjustment and Retraining Notification (WARN) Act if they have 100 or more employees, requiring them to provide 60 days’ advance notice of the layoff. For smaller employers not covered by the WARN Act, there are no specific state laws requiring advance notice, but best practices suggest providing as much notice as possible. Affected employees may be eligible for unemployment benefits.

Resignations in South Dakota

Resignation occurs when an employee voluntarily decides to leave their job. Common reasons for resignation include obtaining a new job opportunity, relocation, personal reasons, or dissatisfaction with the current job. In South Dakota, employees are not required by law to give a notice period before resigning, but it is customary to provide at least two weeks’ notice as a professional courtesy. This allows employers time to plan for the employee’s departure and start the process of finding a replacement. Although there are no specific state laws governing resignations, it’s recommended that employees review their employment contract (if applicable) for any clauses related to resigning, such as notice period requirements or post-employment restrictions.

Why the Termination Process Matters in South Dakota

The termination process in South Dakota carries added weight due to specific state legislation that employers must navigate alongside federal laws. Understanding and adhering to these regulations are crucial for businesses operating within the state to ensure legal compliance and minimize potential litigation risks. Ensure your payroll practices align with termination procedures by reading our article on How to Run Payroll in South Dakota.

For instance, South Dakota law mandates that employers must provide a final paycheck to terminated employees immediately if possible, but no later than the next scheduled payday. Failure to comply with this can result in penalties. Moreover, South Dakota employers are also subject to federal laws such as the Civil Rights Act, the Americans with Disabilities Act, and the Family and Medical Leave Act, which protect employees from discriminatory practices in termination scenarios. Thus, a well-documented termination process that includes clear reasons for the termination, conducted in a manner that respects the employee’s dignity, can help safeguard against claims of wrongful termination.

Termination Laws in South Dakota: What You Need to Know

At-Will Employment

South Dakota’s employment landscape is governed by the ‘at-will’ employment doctrine, meaning that, in the absence of an employment contract stating otherwise, either the employer or employee can terminate the employment relationship at any time, for any reason that is not illegal. This principle is outlined in S.D. Codified Laws 60-4-4 and supported by court decisions such as Reynolds v. Ethicon Endo-Surgery, Inc., 454 F.3d 868 (8th Cir. 2006). However, this broad principle is subject to important exceptions that protect employees from unjust termination.

Final Paycheck

According to South Dakota Codified Law (SDCL) 60-11-14, an employer must provide a terminated employee with their final wages on the next regular payday or when the employee returns all property belonging to the employer, whichever happens later. This law ensures that employees receive what they have earned promptly, providing essential financial security following termination. Failure to comply with this regulation can result in penalties for the employer, reinforcing the law’s purpose to protect workers’ rights.

Discrimination and Retaliation

Termination based on discriminatory reasons, such as race, color, religion, sex, disability, age (40 and over), or national origin, is prohibited under the South Dakota Human Relations Act, as well as federal laws like the Civil Rights Act of 1964 and the Americans with Disabilities Act. For detailed guidance on these protections, the Equal Employment Opportunity Commission (EEOC) website is a valuable resource. Both employers and employees must understand that while the at-will doctrine provides flexibility, it does not grant a license to discriminate.

Tobacco Use

Under S.D. Codified Laws 60-4-11, employers cannot terminate an employee for the use of tobacco products outside of the workplace during non-working hours, except under specific conditions related to job performance or conflicts of interest.

In South Dakota, the legal framework governing employment practices is designed to balance the rights of employees and employers while ensuring a fair and equitable workplace. Wrongful termination stands as a critical concern, highlighting instances where an employee’s dismissal breaches specific legal protections. South Dakota’s approach to wrongful termination includes adherence to both federal guidelines and state-specific legislation, providing a robust legal structure to tackle such issues.

The state’s right-to-work law, as codified in S.D. Codified Laws 60-8-1, underscores a foundational aspect of South Dakota’s employment law. This statute ensures that employees cannot be compelled to join or not join a labor union as a condition of employment, marking a significant stance on workplace autonomy and freedom. While this law primarily addresses union membership and dues, it also sets the tone for broader employment practices within the state, including aspects related to wrongful termination.

Required Documents for Employers and Terminated Employees in South Dakota

Employers’ Requirements 

  • Termination Letter: Clearly state the reasons for termination and the effective date to ensure clarity and legal standing.
  • Final Paycheck: Must be provided by the next regular payday as stipulated by S.D. Codified Laws 60-11-10, including all owed wages and accrued benefits.
  • Record Keeping: Maintain detailed employment records, including performance reviews and disciplinary actions, to support the termination decision if contested.

Terminated Employees’ Requirements 

  • Company Property: Employees must return all company property, such as keys, equipment, and documents.
  • Acknowledgment Forms: Sign off on receiving the final paycheck and understanding the terms of their termination.

Who is Responsible for Terminating in South Dakota?

The procedure for terminating employees in South Dakota can be challenging and necessitates careful management. Managers, Human Resources (HR) representatives, and legal counsel each play pivotal roles in the process, with distinct duties and responsibilities to ensure it is conducted appropriately.

Role and Responsibilities of Human Resources 

  • Policy Enforcement: Ensure compliance with both internal policies and legal standards during the termination process.
  • Documentation: Oversee the creation and retention of all termination-related documents.
  • Communication: Facilitate communication between all parties, conduct exit interviews, and provide information on benefits like the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Role and Responsibilities of Managers 

  • Initial Documentation: Document performance issues and participate in decision-making regarding terminations.
  • Communication: Often tasked with communicating the decision to terminate directly to the employee, emphasizing the need for sensitivity and adherence to training on proper termination procedures.

Role and Responsibilities of Legal Counsel

  • Compliance Oversight: Review termination cases to ensure legal compliance and mitigate potential legal risks.
  • Dispute Management: Handles disputes or legal claims arising from terminations, providing expertise in labor law.

How Long Should the Termination Process Last in South Dakota?

The duration of the termination process in South Dakota can vary significantly based on several factors, including the reason for termination, the need for an investigation, and any contractual or policy requirements. In general, if the termination is due to performance issues, it is advisable to have a documented history of performance evaluations and disciplinary actions. This documentation process can span several weeks or months, depending on the frequency and severity of the performance issues.

For terminations involving misconduct or other immediate concerns, the process may be quicker. However, even in these cases, it’s important to conduct a thorough investigation to ensure that the termination is justified and to minimize legal risks. Such investigations should be conducted as swiftly and efficiently as possible to avoid prolonging the period of potential workplace disruption.

When contractual obligations or collective bargaining agreements are in place, they may stipulate specific notice periods or procedures that must be followed, which can also affect the timeline. Employers should review any applicable contracts or agreements to ensure compliance with these terms.

How Can You Prepare for Termination in South Dakota?

  1. Review Legal Grounds and Policies: Ensure that the reason for the termination is lawful and consistent with company policies. This includes reviewing performance records, disciplinary actions, and any relevant communications.
  2. Document Everything: Maintain thorough documentation of all relevant employee interactions, performance reviews, and incidents that may contribute to the termination decision. This is crucial for defending against potential legal challenges.
  3. Consult HR and Legal Experts: Before proceeding with termination, it’s advisable to consult with human resources and, if necessary, legal experts to review the case and ensure all legal standards are met, including anti-discrimination laws and any contractual obligations.
  4. Plan the Termination Meeting: Organize the logistics of the termination meeting, including deciding who will be present, the timing, and the location. The meeting should be conducted in a private setting to maintain confidentiality and respect for the employee.
  5. Prepare Severance and Transition Information: If applicable, prepare any severance packages and gather information about benefits continuation, such as COBRA, as well as unemployment benefits. This helps in providing the terminated employee with all necessary information during the termination meeting.

Steps for a Respectful Termination Process in South Dakota

The termination process remains as respectful as possible. This involves several steps:

  • Document Performance Issues: In South Dakota, as in many states, maintaining detailed records of an employee’s performance issues is crucial. These records should include dates, specific incidents, and any corrective actions attempted. This documentation can be vital if the terminated employee decides to challenge the dismissal legally.
  • Review Company Policies: Ensure that the termination process adheres to your company policies and procedures as outlined in your employee handbook or employment contracts. South Dakota law requires employers to follow their own rules and procedures as outlined in such documents.
  • Plan the Termination Meeting: South Dakota employers should plan a private, respectful meeting to discuss the termination. It’s often best practice to have an HR representative present during this meeting to ensure that all company policies and state laws are followed. During this meeting, it’s essential to be clear, concise, and respectful when explaining the reasons for termination.
  • Communicate Effectively: Clearly and professionally communicate the reasons for the termination, focusing on the facts and the documentation you have prepared. It is crucial to avoid any language that could be perceived as discriminatory or retaliatory, as this could lead to legal challenges under both state and federal laws.
  • Issue the Final Paycheck: According to South Dakota Codified Law (SDCL 60-11-10), employers are required to issue a final paycheck to terminated employees on the next regular payday or within the next scheduled payday that is at least three business days after the employee was laid off or terminated. Failure to comply with this law can result in penalties.
  • Provide Support: Offering support, such as outplacement services, can help ease the transition for the terminated employee and potentially reduce the risk of legal action. While not required by South Dakota law, providing such support can be a good practice for maintaining a positive company culture and reputation.

Post-Termination: What Happens Next?

  1. Final Paycheck: According to South Dakota law, the final paycheck should be issued on the next scheduled payday or before if possible. This paycheck should include compensation for all hours worked and any accrued benefits, such as unused vacation pay, if applicable under company policy.
  2. Return of Company Property: Arrange for the return of any company property in the possession of the terminated employee. This might include keys, badges, equipment, and documents.
  3. Update Company Records: Remove the employee from the company’s active payroll and benefits plans. Ensure that access to company systems and facilities is revoked to protect company information and property.
  4. Communication with Remaining Staff: Communicate the termination to other employees in a manner that respects the privacy of the terminated employee and maintains morale. It’s important to be transparent about the impact of the termination on workflow and to address any changes in responsibilities or structure.
  5. Review and Reflect: Evaluate the termination process to identify any areas for improvement. This can help refine procedures and policies for future terminations and reduce potential liabilities.

Legal Considerations During Termination in South Dakota

Ensuring compliance with all relevant laws during employee termination is crucial for businesses operating in South Dakota to safeguard against potential legal claims. This includes adhering to the at-will employment exceptions, which include termination for discriminatory reasons, retaliation against an employee for a protected activity (such as whistleblowing), or breach of an employment contract. Moreover, respecting the rules surrounding the issuance of the final paycheck is another critical aspect of the termination process.

Bonus: Best Practices for Reducing Litigation Risks in South Dakota

  • Clear and Consistent Policies: South Dakota businesses must ensure their employment policies are not only clear and consistently applied but also compliant with state-specific laws such as the South Dakota Human Relations Act, which prohibits discrimination in employment.
  • Regular Training: Training in South Dakota should include sessions on state-specific employment laws, including wage and hour laws, such as the South Dakota Minimum Wage law, and the state’s unique provisions for breaks and meal periods. This ensures management is aware of local legal standards in addition to federal laws.
  • Document Everything: In South Dakota, maintaining detailed records is not only a best practice but a legal requirement for certain aspects of employment, such as hours worked and wages paid, as outlined by the South Dakota Department of Labor & Regulation. This documentation can be crucial in defending against claims such as wage disputes or wrongful termination.
  • Fair Treatment: Treating employees fairly and equitably is a universal best practice, but in South Dakota, this also means adherence to specific legislation such as the South Dakota Codified Laws (SDCL) 20-13, which ensures all employees are treated equally regardless of race, color, creed, religion, sex, ancestry, disability, or national origin.
  • Seek Legal Advice: Given the complexity of employment law, both at the federal and state level, consulting with legal counsel who is well-versed in South Dakota’s specific labor laws is crucial. For instance, navigating the intricacies of the South Dakota Workers’ Compensation Act requires expertise to ensure compliance and minimize litigation risk.

Final Thoughts

Navigating the termination process in South Dakota successfully demands a thorough grasp of legal obligations and a dedication to treating employees with fairness and respect. Employers must handle terminations with care, ensuring they are fully prepared with the necessary documentation to justify lawful reasons for dismissal and that they conduct the process with dignity and fairness. All termination actions must comply with company policies and both state and federal laws to affirm the legality of the termination. By following the detailed guidelines provided in this guide, employers can manage terminations effectively, stay compliant, and minimize the risk of legal challenges.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.