Can the South Dakota Board of Finance lawfully say that a state employee stops earning new annual leave once they put in notice that this vacation is the last thing before they quit?
Plain-English summary
A state administrator named Mr. Sell asked AG Gordon Mydland about two Board of Finance regulations. The setup: SDCL 3-6-6 said every state employee earned a set number of vacation days per year, accruing monthly, cumulative for two years. The regulations (40.00800 and 40.00801) said an employee who took a vacation and came back to work continued to accrue leave during the vacation, but an employee who scheduled a vacation as the final stretch of employment before terminating would not accrue any new leave after their last actual working day.
The AG ruled against the regulations. SDCL 3-6-6 gave the right to accrue leave to every state employee. The Board of Finance had no statutory authority to distinguish between an employee on vacation who returned to work versus one whose resignation took effect at the end of the vacation. Two earlier AG opinions (49 AGR 386 and 65 AGR 114) had already concluded that an employee whose resignation became effective at the end of a vacation remained a state employee throughout the vacation. Mydland concurred, and noted the unfairness: a conscientious employee who delayed vacation until work was finished would be punished, while one who took vacation first and resigned at the end would be rewarded.
So the rule: while on vacation, the employee continued to accrue leave on the same monthly schedule, period. The Board of Finance regulations to the contrary were invalid.
Currency note
This opinion was issued during AG Gordon Mydland's tenure in the early 1970s. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. State employee leave administration has been restructured multiple times; current Bureau of Human Resources rules and the modern equivalent of SDCL 3-6-6 should be checked before applying this opinion's reasoning to a present-day situation.
What the opinion meant at the time
For state employees planning a resignation, the opinion guaranteed full leave accrual through the vacation that bridged the final working day to the termination date. That meant a small but meaningful additional payout at separation (since unused leave was generally cashed out).
For the Board of Finance and state personnel administrators, the opinion was a clear "you cannot do that by regulation." Distinguishing between employees based on what they would do at the end of vacation was administrative line-drawing that the statute did not authorize.
For employee relations generally, the opinion reflected an early-1970s view that administrative rules must hew closely to statutory grants. The AG would not bless distinctions invented by agencies if the statute did not authorize them.
Common questions
Q: Could the Board of Finance fix this with a different regulation?
A: Only if SDCL 3-6-6 was amended. The AG read the statute as giving the right to "every state employee," with no exception for terminating employees. A regulation differentiating those groups conflicted with the plain statutory language.
Q: Was leave accrual really worth fighting about?
A: For a 25-year employee at the top step, a few weeks of additional accrued leave could be a noticeable payout. More fundamentally, the regulation set a precedent for agency carve-outs of statutory rights, which the AG was unwilling to endorse.
Q: Did the opinion address the cumulative-for-two-years cap?
A: It mentioned the cap (from SDCL 3-6-6) in passing but did not analyze how it interacted with terminating employees. Presumably the cap still applied: an employee who had already maxed their two-year accumulation could not accrue more during the terminating vacation.
Q: What about sick leave?
A: The opinion addressed annual leave only. Sick leave rules were governed by different statutory provisions and different regulations.
Q: Did this opinion settle the issue permanently?
A: Yes for the duration of the regulation in question, but state personnel rules have been replaced multiple times since. Practical advice for any state employee in a similar situation today: check the current Bureau of Human Resources policy and modern leave statutes; do not rely on this 1970s opinion as a present-day rule.
Background and statutory framework
South Dakota's state-employee leave framework rested on SDCL Title 3 (Public Officers and Employees). Section 3-6-6 set the basic annual leave entitlement. The Board of Finance had general authority over financial regulations affecting state employees, including pay and leave administration.
When agency rules and statutes collided, the SD AG had a clear approach: the statute prevails unless the legislature has expressly delegated discretion to the agency to make distinctions. Here the statute used the phrase "every state employee" with no carve-out, and the AG read that to mean every state employee, including one whose resignation was pending.
The two earlier opinions (49 AGR 386 from 1949-50 and 65 AGR 114 from 1965-66) had already drawn the line: an employee on a vacation that ended with resignation remained a state employee throughout. Mydland's 1971-era opinion simply applied that conclusion to the specific Board of Finance regulations.
Citations and references
Statutes:
- SDCL 3-6-6 (state employee annual leave; cumulative two years)
Prior AG opinions:
- 49 AGR 386
- 65 AGR 114
Board of Finance regulations addressed:
- Regulation 40.00800
- Regulation 40.00801
Source
Original opinion text
Validity of Board of Finance Regulation No. 40.00800-01
Dear Mr. Sell:
You have asked whether Board of Finance Regulation No. 40.00800 and 40.00801 are in violation of SDCL 3-6-6. The regulations in question provide that an employee may not accrue annual leave when he is on annual leave and terminating employment. In other words, an employee may accrue annual leave, even when he is on vacation, if he returns to his job. However, if he gives notification that he is terminating employment at the end of his vacation, he cannot accrue additional annual leave after the last day he works, even though he remains an employee of the state until his annual leave is used up.
SDCL 3-6-6 is the statute which provides that every state employee shall be allowed a certain number of days leave of absence for vacation with pay each year. Such leave of absence is to be accrued on a monthly basis and is cumulative for two years.
Although this exact question has never been answered by an Attorney General's Opinion, 49 AGR 386 and 65 AGR 114 are pertinent. In those opinions, the Attorney General held that an employee whose resignation was to become effective on the last day of his vacation, remained an employee of the state during his vacation.
I concur in those opinions, and it is further my opinion the statute in question does not give the Board of Finance any guidelines authorizing discrimination between employees on this basis. An employee of the state retains all the rights and responsibilities of his employment irrespective of the fact that he is on vacation. To discriminate against those who delay their vacation until their work is completed would place the conscientious employee in an unfair position with an employee who takes his vacation and gives notice of resignation on the last day of his vacation.
To reiterate, it is my opinion that irrespective of Board of Finance Regulations 40.00800 and 40.00801, an employee may accrue annual leave during any period of time in which he is employed by the state, subject, of course, to other annual leave regulations.
Respectfully submitted,
Gordon Mydland
Attorney General