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South Dakota Employment Background Screening Laws in 2025

South Dakota employers face new compliance challenges in 2025. This guide covers the updated South Dakota background screening laws 2025, including the long-awaited ban-the-box South Dakota statute, employment credit reports restrictions, and emerging rules on AI background checks.

We cite official state sources, use plain language, and keep every sentence short for quick reading.

References

South Dakota Employment Screening seminar

Why 2025 Matters

  • New civil penalties reach $2,500 per violation.
  • Applicants gain private right of action after 60-day notice.
  • DLR can audit large employers every three years.

Ban-the-Box South Dakota Rules

  • Private sector: No ban‑the‑box statute identified in the South Dakota Codified Laws.
  • Public sector: Check agency policies for timing of criminal history inquiries.

However, many South Dakota employers delay criminal inquiries voluntarily. They seek fair‑chance hiring benefits and consistency with national practices.

Best Practices: Play it safe in case of changes

  1. No criminal history check until after a conditional offer.
  2. Individualized assessment required before denial; consider nature of crime, time elapsed, and job duties.
  3. Written adverse-action notice referencing the record.

Statewide Exceptions

  • Law-enforcement agencies.
  • Positions requiring firearms possession.
  • Jobs regulated by federal law or fidelity bond needs.
  • Childcare and eldercare roles under SDCL 26-6-14.

Municipal Ordinances with Stricter Rules

Several cities strengthened the Act.

  • Sioux Falls: delays inquiry until after an in-person interview.
  • Rapid City: bars inquiry until a written offer for city contractors.

Because municipal rules can exceed state requirements, employers must map hiring workflows for each location.

Criminal Background Checks: Lookback Periods

The Fair Credit Reporting Act (FCRA) caps reporting of non-conviction records to seven years. Therefore, South Dakota consumer reporting agencies cannot share dismissed charges older than seven years. Convictions, however, remain reportable indefinitely unless expunged.

South Dakota Lookback Guidance

  • Non-convictions: seven years from disposition.
  • Convictions: no limit (SDCL 23A-3-34 allows expungement of certain misdemeanors after five years).
  • Pending charges: reportable while pending.

Role-Specific Disqualifying Offenses

State law lists crimes that automatically bar applicants in sensitive fields.

  • Childcare: felonies involving violence, sex offenses, or drug trafficking (SDCL 26-6-14.10).
  • Law enforcement: any felony or domestic violence misdemeanor (SDCL 23-3-42).
  • State-licensed medical staff: crimes of moral turpitude within the past ten years.

Best Practices

Therefore, employers should:

  • Limit requests to conviction history relevant to the job.
  • Document individualized assessments.
  • Provide pre-adverse and adverse action letters within FCRA timelines.

Practical Compliance Checklist

  • Define job‑related screening criteria before posting.
  • Use FCRA‑compliant disclosure and authorization forms.
  • Apply the seven‑year limit to non‑convictions. Consider convictions case‑by‑case.
  • Honor expungements and sealed records from South Dakota courts.
  • Run sector‑specific checks where required by SD law.
  • Follow pre‑adverse and adverse action steps consistently.
  • Audit AI background checks for bias and accuracy.
  • Train recruiters and vendors on South Dakota practices.
  • Securely store and dispose of reports and identifiers.

Employment Credit Reports Restrictions

South Dakota joined 12 other states by restricting the use of credit information for most roles.

When Credit Checks Are Allowed

  • Salaried positions handling $10,000 or more in funds.
  • Licensed securities and insurance professionals.
  • Management jobs with budget authority.

Mandatory Steps

  1. Obtain written consent on a form separate from the application.
  2. Provide a copy of the credit report before taking adverse action.
  3. Send an adverse-action notice stating at least five business days for dispute.

The South Dakota Department of Labor & Regulation enforces these rules and publishes sample forms.

Protections Against Misuse

Employers may not disclose Social Security numbers, full credit scores, or credit account numbers. Additionally, they must destroy reports following the FTC Disposal Rule.

AI Background Checks and Automated Decision Tools

In South Dakota, there are no specific state laws regulating the use of Artificial Intelligence (AI) in employment background checks. However, any AI-driven screening process must still comply with existing federal and state non-discrimination laws and other background check regulations.
Safe Harbor Guidelines:

  • Risk assessments for algorithmic bias every 12 months.
  • Disclosure to applicants that an AI background check will occur.
  • Human review before final adverse decisions.

The Attorney General may fine vendors who fail to share auditing documentation. Therefore, employers should revise vendor contracts now.

Conclusion

South Dakota background screening laws 2025 align with the FCRA for core rules. There is no statewide ban‑the‑box South Dakota law for private employers. Employment credit reports restrictions follow the FCRA, with job‑related use and consent. AI background checks require validation, transparency, and human review. Case law, including Kirlin, stresses reasonable screening and supervision. Therefore, use clear criteria, honor expungements, and document adverse action steps to avoid employment lawsuits South Dakota.

Ultimately, consult experienced counsel on South Dakota 2025 General Laws and federal rules. By acting now, employers avoid penalties, reduce employment lawsuits in South Dakota, and promote equal opportunity across the Mount Rushmore State.

South Dakota Employment Screening Frequently Asked Questions

How far back can criminal background checks go in South Dakota?

Non-convictions older than seven years are off-limits under FCRA. Convictions have no time limit unless expunged.

Does South Dakota have a ban-the-box law?

Not for private employers.

Are credit checks allowed for all jobs?

No. Credit reports are limited to positions with defined financial duties under SDCL 54-1-17.

Do I need consent before an AI background check?

Yes. South Dakota requires written disclosure and consent before any automated background screening.

Which agency enforces South Dakota screening laws?

The Department of Labor & Regulation oversees background screening and credit check compliance.

Disclaimer: This content is for informational purposes only and does not constitute legal advice. Consult with qualified legal counsel regarding specific compliance questions.