South Dakota Business Law - Are Workers in South Dakota Employees or Independent Contractors?

In South Dakota, when courts determine whether an individual is an employee or an independent contractor, a four-step analysis is used:

(1) is the person engaged in an enterprise that was created and exists apart from her relationship with the company and that the enterprise would survive the termination of that relationship;

(2) does the person have a proprietary interest in the enterprise to the extent that she can operate without hindrance from any other individual;

(3) is the person, due to her skill, engaged in an economic enterprise such that she bears the risk of unemployment; and

(4) does the person remain employed as a function of market forces and the demand for her skills, rather than the response of an employer to similar economic realities.

All four prongs of this test require that the individual have some relationship with an economic enterprise that is independent of the relationship with the company that is allegedly subject to unemployment insurance taxation. Of course, the application of these factors is highly fact specific.