South Dakota Mileage Reimbursement: SDCL §60-2-1 and the "Necessarily Expends" Rule

South Dakota law says an employer "shall indemnify an employee" for all the employee "necessarily expends or loses in direct consequence of the discharge of the employee's duties." The statute never uses the word mileage, so it is narrower than the explicit mandates in California, Illinois, and Massachusetts. But when your employer requires you to drive your own vehicle for work, the cost of that driving is the kind of expense the wording reaches.

Source: SDCL §60-2-1 (Indemnification of employee by employer, exceptions) and SDCL §60-2-2 (losses for which the employer is not required to indemnify), South Dakota Legislature. Text read on the Legislature's site, September 2026.

What SDCL §60-2-1 says

The full rule is one sentence: an employer "shall indemnify an employee, except as provided in §60-2-2 for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties, or of the employee's obedience to the direction of the employer, even though unlawful, unless the employee at the time of obeying such directions believed such directions to be unlawful."

• Necessarily expends. The cost has to be required by the job. Fuel for a delivery route your employer assigned is necessary. Fuel for a trip you chose to make in person when a call would have done is not.
• In direct consequence of your duties. Driving between job sites, client visits, and errands for the employer counts. Your ordinary commute does not.
• Obedience to the employer's direction. If your manager tells you to use your own car, the cost follows from that instruction.

The exception: ordinary risks of the business

The next section, §60-2-2, says an employer is not bound to indemnify losses "in consequence of the ordinary risks of the business in which employed," or losses caused by the negligence of a co-employee, unless the employer failed to use ordinary care in choosing that co-employee. That exception is about losses, such as an accident risk built into the work. It is not a general permission to skip reimbursing the ordinary cost of required driving, though an employer may argue it is.

How this applies to mileage

Because the statute does not name mileage or set a rate, it does not tell you how much. The 2026 IRS rate (72.5 cents per mile through June 30, 76 cents from July 1) is a widely used yardstick, and many employers reimburse at or near it, but South Dakota law does not require that number. If your employer has a written per-mile policy, that is usually what you will be paid.

Where there is no policy and you are required to drive your own vehicle, §60-2-1 is your legal footing to ask for reimbursement. Put the request in writing, attach your log, and name the statute.

Time limits

South Dakota generally gives six years to bring an action on a liability created by statute, under SDCL §15-2-13, unless a different limit applies to your situation. Do not sit on it: old mileage is hard to prove. If real money is at stake, talk to an employment lawyer or the South Dakota Department of Labor and Regulation before deciding how to proceed.

Keep the log that proves it

A reimbursement request, and any later claim, rests on the same four facts the IRS asks for: date, destination, business purpose, and miles. A contemporaneous log beats a spreadsheet rebuilt from memory. See the mileage log requirements guide.

W-2 vs 1099

SDCL §60-2-1 protects employees. If you are an independent contractor, it does not apply, and you deduct your mileage on Schedule C instead. See the South Dakota mileage deduction guide. W-2 employees cannot deduct mileage on their own federal return, which is why reimbursement matters: see why the W-2 deduction is gone.

FAQ

Does South Dakota require employers to reimburse mileage?

South Dakota requires employers to indemnify employees for what they necessarily spend in doing the job, under SDCL §60-2-1. The statute does not name mileage, so how it applies to a personal vehicle depends on the facts, mainly whether the employer required you to drive.

Does the law set a per-mile rate?

No. The statute sets no rate. The IRS rate is a common benchmark, and your employer's written policy usually governs the amount.

Is mileage named in the statute?

No. The wording is "necessarily expends or loses," and vehicle costs fall under it only through that broad language.

Can independent contractors use this statute?

No. It runs between an employer and an employee. Contractors deduct business mileage on Schedule C.

What if my employer says driving is an ordinary risk of the business?

Section 60-2-2 speaks of losses from the ordinary risks of the business, such as accident risk. Whether it covers the everyday cost of required driving is a legal question for your situation, so get advice before relying on either reading.

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