South Dakota Severance Pay Laws (2026): Is Severance Required?

South Dakota law does not require employers to pay severance. We found no South Dakota statute that creates a severance or plant-closing pay mandate, and the state Department of Labor and Regulation says South Dakota adds no layoff-notice requirements to the federal WARN Act. Where South Dakota law does address severance is unemployment: SDCL 61-6-35(1) reduces or eliminates benefits for the weeks a severance payment covers, whether or not the employer had to pay it.

For the federal rules and how other states compare, see our severance pay laws by state guide.

Information last verified on October 8, 2026. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers South Dakota law on severance pay: the absence of a state mandate or layoff-notice law, the wage-payment chapter (SDCL chapter 60-11) and the unemployment offset in SDCL 61-6-35. Federal rules appear in short notes; the full federal layer is on our severance pay laws guide. For final pay deadlines, see South Dakota final paycheck laws; for benefit amounts, see South Dakota unemployment benefits.

Is severance pay required in South Dakota?

No South Dakota law we found requires it. We reviewed the full text of every section of SDCL Title 60 (Labor and Employment) and Title 61, the unemployment title, for severance, dismissal pay, separation pay, plant closing, mass layoff and pay in lieu of notice. No section requires an employer to pay severance; the only severance references are unemployment rules (SDCL 61-6-35 and 61-1-50).

Federal law does not require severance either: the U.S. Department of Labor says there is no severance requirement in the Fair Labor Standards Act and that severance is a matter of agreement between employer and employee. Our review covered Titles 60 and 61, not the whole code, so treat it as what we found rather than a guarantee. For how at-will employment works in the state, see South Dakota at-will employment laws.

South Dakota has no state WARN act

The South Dakota Department of Labor and Regulation (DLR) says: "South Dakota does not have any additional requirements beyond what the U.S. Department of Labor requires for a WARN to be issued." Our text review of Titles 60 and 61 found no plant-closing or mass-layoff statute either.

Federal WARN covers employers with 100 or more employees not counting part-time employees, or 100 or more employees, counting part-time workers, who together work at least 4,000 hours a week not counting overtime (29 U.S.C. 2101(a)(1)). A covered employer must give 60 days' written notice before a covered plant closing or mass layoff, and one that skips it owes back pay and benefits for up to 60 days (29 U.S.C. 2102(a), 2104(a)). Our severance pay laws guide explains the thresholds.

Is promised severance covered by South Dakota wage law?

South Dakota law does not say, and we found no South Dakota court decision on it. The key limit is SDCL 60-11-14: the wage-payment sections 60-11-8 through 60-11-23 "do not apply to any form of compensation other than cash wages owing to any employee by or on behalf of any employer." Whether a promised cash severance payment is "cash wages" under that section is unresolved.

If severance were treated as wages, SDCL 60-11-7 would matter: "if a private employer has been oppressive, fraudulent, or malicious, in the employer's refusal to pay wages due to the employee, the measure of damages is double the amount of wages for which the employer is liable." No source we read applies that to severance.

When payment is due

When an employer separates an employee, SDCL 60-11-10 says "the unpaid wages or compensation of such employee are due and payable not later than the next regular stated pay day for which those hours would have normally been paid or as soon thereafter as the employee returns to the employer all property of the employer in the employee's possession." The section is written around hours worked and does not mention severance, so the agreement or policy that promises severance generally sets its payment date. Final-wage timing is covered in South Dakota final paycheck laws.

Wage claims with the Department of Labor and Regulation

DLR takes wage disputes through its Claim of Unpaid Wages form. Under SDCL 60-11-17, the department investigates violations of the wage-payment sections and "shall cooperate with any employee in the enforcement of a claim against the employer in any case whenever, in its opinion, the claim is valid." It may take assignments of wage claims "not to exceed five hundred dollars in any case of any one claim" (60-11-18). DLR's page does not say whether it will take a claim for promised severance, so ask first.

We found no wage-specific filing deadline in chapter 60-11. A lawsuit on a severance promise as a contract would fall under SDCL 15-2-13(1), which sets six years for "an action upon a contract, obligation, or liability, express or implied."

How severance affects South Dakota unemployment benefits

Severance reduces or delays South Dakota unemployment benefits. Under SDCL 61-6-35(1), you are not entitled to benefits for a week in which you are receiving, have received or will receive "Termination, vacation, holiday, severance, or dismissal payments or wages in lieu of notice whether legally required or not."

The statute spreads a lump sum over a number of weeks equal to the payment divided by your regular pay while employed, starting with the weeks right after your last day of work. If the payment for a week is less than the benefit you would otherwise get, you receive the benefit reduced by that amount.

DLR's deductions page lists severance pay and wages in lieu of notice among payments deducted dollar for dollar, and says: "You will be ineligible for benefits based on the number of weeks the payment represents, beginning with the last day you worked regardless of when the payment was received." Its claimant handbook adds, "A severance package, vacation, sick, holiday, or a continuation of pay from an employer may affect your benefits." Report any severance when you file. Benefit amounts and filing steps are on our South Dakota unemployment benefits page.

What a South Dakota severance agreement can ask you to give up

We found no South Dakota statute in Title 60 that limits release, nondisclosure or non-disparagement terms in a severance agreement or sets a state review or revocation period. That rests on a text search of Title 60, not the whole code.

A release in a severance agreement cannot take away your right to unemployment benefits. Under SDCL 61-6-47, "Any agreement by an employee to waive, release, or commute the employee's rights to benefits or any other rights under this title is void." The same section says no employer may require or accept such a waiver, and an employer that violates it commits a Class 2 misdemeanor.

On wage claims, SDCL 60-11-13 says that accepting a payment of undisputed wages "does not constitute a release as to the balance of the claim." We found no South Dakota statute or case on whether a negotiated severance release can waive a wage claim.

If you are 40 or older, federal law gives you at least 21 days to consider a release of age-discrimination claims (45 days in a group layoff) and 7 days after signing to revoke it (29 U.S.C. 626(f)). Other federal limits, and general tips on reading an offer, are on our severance pay laws guide.

Non-compete terms in a severance agreement

South Dakota voids contracts that restrain a lawful profession, trade or business except as its statutes allow (SDCL 53-9-8). An employee may agree, at hiring or during employment, not to compete for up to two years within a specified area where the employer continues a like business (SDCL 53-9-11), and non-competes restricting certain health-care practitioners (contracts from July 1, 2023) and community services providers (contracts from July 1, 2026) are voidable (SDCL 53-9-11.2).

Recent changes and bills

We found no severance, layoff-notice or separation-agreement bill in South Dakota's 2025 or 2026 regular sessions, based on a scan of every bill title. One 2026 bill, SB 6, would have reduced the duration of reemployment benefits; it did not touch the severance offset, and the Senate Commerce and Energy Committee tabled it on February 19, 2026.

Related

• Severance pay laws by state
• South Dakota final paycheck laws
• South Dakota unemployment benefits
• South Dakota at-will employment laws

Disclaimer: This article provides general legal information about South Dakota severance pay law (the wage-payment rules in SDCL chapter 60-11 and the unemployment rules in SDCL Title 61) and the federal laws that apply in South Dakota. It is not legal advice. The information was verified on October 8, 2026. For advice about your situation, contact the South Dakota Department of Labor and Regulation, a legal aid office, or a lawyer licensed in South Dakota.

Last updated: October 8, 2026.

Frequently Asked Questions

Is severance pay required by law in South Dakota?

No South Dakota statute we found requires it, and federal wage law does not require it either. Severance is owed only when a contract, policy or separation agreement promises it.

Does severance affect unemployment in South Dakota?

Yes. SDCL 61-6-35(1) denies or reduces benefits for weeks covered by severance or dismissal payments, legally required or not, and DLR deducts severance dollar for dollar starting with your last day of work.

How is a lump-sum severance counted for South Dakota unemployment?

SDCL 61-6-35 divides the lump sum by your regular pay to get a number of weeks and applies them to the weeks right after your last day of work. DLR says this applies regardless of when you received the payment.

Does South Dakota have a state WARN Act?

No. DLR says South Dakota has no requirements beyond federal WARN, which requires covered employers to give 60 days' written notice before a covered plant closing or mass layoff (29 U.S.C. 2102(a)).

Can a South Dakota severance agreement make me give up unemployment benefits?

No. SDCL 61-6-47 says any agreement to waive, release or commute your benefit rights is void, and an employer that requires or accepts such a waiver commits a Class 2 misdemeanor.

How long do I have to sue over a broken severance promise in South Dakota?

We found no wage-specific deadline in SDCL chapter 60-11. SDCL 15-2-13(1) sets six years for an action upon a contract, express or implied.