South Dakota tip pooling laws & tipped minimum wage
In South Dakota, employers can pay tipped workers $5.93/hr as long as tips bring them to the $11.85 minimum — here's how that works and who can legally share your tips.
| Regular minimum wage | $11.85/hr |
| Minimum cash wage for tipped workers | $5.93/hr |
| Maximum tip credit | $5.92/hr |
| Tips belong to | Employees — always |
A tip credit lets an employer count your tips toward the minimum wage it owes you. Rates reviewed July 2026. Rates change — confirm with the South Dakota labor department. Not legal advice.
What's specific to South Dakota
South Dakota’s tipped cash wage is half the state minimum, which adjusts annually for inflation.
South Dakota’s minimum wage rises every January — and the tipped rate is half of it
South Dakota does not sit at the federal $7.25. Voters tied the state minimum wage to inflation, so it is adjusted each January by the change in the cost of living. As of January 1, 2026 the minimum wage is $11.85 an hour.
The tipped cash wage is set by law at half the minimum wage. For 2026 that works out to $5.925, so your employer may pay a cash wage of $5.93 an hour and claim the rest as a tip credit, as long as your tips bring you to the full $11.85.
If tips fall short, the shortfall is your employer’s to cover
The half-wage rate assumes tips make up the difference. In any pay period where your cash wage plus tips do not reach $11.85 an hour, your employer must pay the gap as additional wages. You count as a tipped employee if you customarily receive more than $35 a month in tips.
Because the figures move every January, check the current rate at the start of each year. The South Dakota Department of Labor and Regulation publishes the updated minimum and tipped wages and handles wage complaints.
Tip pooling in South Dakota
South Dakota follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $5.93/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
One federal rule applies everywhere: managers and supervisors can never take from a tip pool. Separately, credit card processing fees may only be deducted from tips where state law allows it.
What this means for your tip-out
Because part of your legal wage in South Dakota comes from tips, the employer's tip credit assumes those tips reached you. Use the tip-out calculator to split a shift by your house's percentages or by hours, and see standard tip-out percentages to check whether your house's rates are typical.
South Dakota tip law FAQs
What is the tipped minimum wage in South Dakota?
Employers in South Dakota may pay tipped employees a cash wage of $5.93/hr and claim a tip credit of up to $5.92/hr toward the $11.85 minimum wage. If tips don't close the gap in a workweek, the employer must make up the difference.
Is mandatory tip pooling legal in South Dakota?
South Dakota follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $5.93/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
Can my manager take a share of the tip pool in South Dakota?
No. Federal law prohibits managers, supervisors, and owners from keeping any portion of employee tips in every state, including South Dakota. A manager may keep only tips they directly and solely earned (e.g., a table they personally served start to finish).
How is South Dakota’s tipped wage calculated?
By statute it is exactly half the state minimum wage. With the 2026 minimum at $11.85, the tipped cash wage is $5.925, paid as $5.93 an hour, and your tips must bring the total to at least $11.85.
Does South Dakota’s tipped wage change every year?
Yes. The minimum wage is adjusted for inflation each January 1, and because the tipped rate is half the minimum, it moves with it. Confirm the current figure at the start of each year.