Department of Labor and Regulation

Title - Labor Market Information Center

Covered Workers & Pay - Technical Notes

Covered Workers
Covered workers are employed at firms covered by South Dakota unemployment insurance (UI) laws and the Unemployment Compensation for Federal Employees (UCFE) program. Covered workers include employees who are paid a wage or salary during the year; it excludes the self-employed and unpaid family workers. Wage and salaried workers are covered regardless of type of ownership; employees working at privately owned businesses and federal, state and local government agencies are all included.

However, not all employees are covered workers. South Dakota wage and salaried workers not covered by South Dakota unemployment insurance law include railroad employees, government elected officials, election workers, work-study students and religious organization employees. (Some religious organizations may opt to provide unemployment insurance coverage to their employees and are included in the published data.)

Nonprofit organizations may or may not be covered by unemployment insurance; it depends upon whether or not they meet specific employment requirements. Smaller businesses may also be exempted from coverage if they do not meet unemployment insurance law minimum payroll and employment criteria. Businesses who hire only a few workers on a part-time or seasonal basis make up a large part of the exempted group.

Each employer in South Dakota who is covered by unemployment insurance is assigned an industry classification and a county code. The industry classification is determined by the business activity and type of ownership, and the county code is determined by worksite location (store, branch, office, etc.).

Covered worker data includes businesses in both the agricultural and non-agricultural industries. For example, farms and ranches would be included in the agriculture, forestry, fishing and hunting industry. Of course, only the larger farms and ranches employing year-around workers would be covered.

Covered worker data is based on unemployment insurance reports submitted by South Dakota employers and data gathered by the LMIC in cooperation with the U.S. Bureau of Labor Statistics. The LMIC collects covered worker data as part of the national Quarterly Census of Employment and Wages program. Although the unemployment insurance reports are based on employer serial numbers, the LMIC gathers additional data by establishment. A covered employer could include one or more establishments, conducting business at different worksite locations. Each establishment is given an industry and county code.

The covered worker data is a great source of information, providing a great deal of industry data. It covers almost all industries, and data is collected by individual establishment. Confidentiality laws restrict the publication of individual employer data, but a great deal of information by industry can be published. In addition, covered workers represent almost all wage and salaried workers. It is basically a universe of all wage and salaried workers. Thus, covered workers provide very solid information on worker and industry trends.

Wages
By definition, wages include commissions, bonuses and the cash value of any payment in anything other than cash. Cash value includes items such as goods, board and lodging, etc.

Tips and gratuities must be reported if they total more than $20 per month and are reported by the worker to the employer. These tips are to be included in the gross wages of the employee.

Wages include:

  • Vacation/Annual Leave
  • Sick/Medical Pay
  • Gifts/Awards
  • Employee Contributions to Retirement Plans or Annuities Plans
  • Cafeteria/Section 125 Plans
  • On-the-Job Training
  • Profit Sharing
  • Savings Plans

Wages do not include:

  • Termination/Severance (if not legally required to pay)
  • Dismissal Pay/Wages in Lieu of Notice (if not legally required to pay)
  • Employer Contributions to Retirement or Pension Plans Authorized Under 401(k), 403(b), 408(k), 408(p) or 457
  • Elected Officials
  • Work Study Students at a non-profit or public educational institution

Covered employers in most states report total compensation paid during the calendar quarter, regardless of when the services were performed. A few state laws, however, specify that wages be reported for, or be based on, the period during which services are performed—rather than for the period during which compensation is paid. Under most state laws or regulations, wages include bonuses, stock options, severance pay, the cash value of meals and lodging, tips and other gratuities, and—in some states—employer contributions to certain deferred compensation plans, such as 401(k) plans.

Total wages exclusions

Covered employer contributions for old-age, survivors and disability insurance; health insurance; UI; workers’ compensation; and private pension and welfare funds are not reported as wages. Employee contributions for the same purposes, however, as well as money withheld for income taxes, union dues and so forth are reported, even though they are deducted from the worker’s gross pay.

Average wages

Average annual wages per employee for any given industry are computed by dividing total annual wages by annual average employment. A further division by 52 yields average weekly wages per employee. Annual pay data only approximate annual earnings, because an individual may not be employed by the same employer all year or may work for more than one employer at a time.

Average weekly or annual pay is affected by the ratio of full-time to part-time workers, as well as by the numbers of individuals in high- and low-paying occupations. When comparing average pay levels among States and industries, data users should take these factors into consideration. For example, industries characterized by high proportions of part-time workers will show average weekly wage levels appreciably less than the weekly pay levels of regular full-time employees in these industries. The opposite is true of industries with low proportions of part-time workers and of industries that typically schedule heavy weekend and overtime work. Average wage data also may be influenced by work stoppages, labor turnover, retroactive payments, seasonal factors and bonus payments.

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Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184