The 10-page opinion from Attorney General Henry McMaster was issued just days before the governor's deadline for the Employment Security Commission to get him data on jobless residents.
Mr. Sanford has criticized the agency as being out of control and threatened to fire its three commissioners unless he gets specific data on who is losing jobs by Monday. Critics had claimed the governor doesn't have the power to follow through with the threat.
Mr. McMaster's opinion, which is not legally binding, was requested by House Majority Leader Kenny Bingham, R-West Columbia. It states the governor can decide the commissioners have committed wrongdoing and then fire them, but also notes that precedent allows for an ensuing hearing. The opinion also states that any firing would be subject to a lawsuit as well.
The spat between Mr. Sanford and the Employment Security Commission has been a sideshow as news of the state's sputtering economy worsens each month.
Weekly payouts to about 104,000 unemployed people cost a total of $20 million in one week last month. In December, a record 207,000 people were looking for work as the state's unemployment rate hit 9.5 percent -- the third-highest in the nation.
That month, Mr. Sanford refused until the 11th hour to borrow federal money to keep unemployment checks flowing, relenting when a deal was struck and legislators called for an audit of the commission.
When the governor announced his threat to ax the commissioners, he said he'd make a clean sweep of the board if firing was warranted. A spokesman for the governor said Friday that, while the opinion confirms what Mr. Sanford believed he could do, a decision on the commissioners' fate would not be made yet.
"We're awaiting receipt of the data, at which point we'll go through it and see if indeed that's the course we will take," Joel Sawyer said.
Mr. Bingham, who on Wednesday filed legislation that would move the unemployment agency directly under Mr. Sanford's control as part of his Cabinet, said the opinion squared with what he thought were the governor's powers to force public officials to give information.
"We shouldn't have to go through this circus to get that information," he said. "This is crazy. This is information the governor wanted to do his job, and that information should be provided to him."
The commission has said problems are tied to the economy, not how the system is run, but acknowledge it's up to the Legislature to decide what happens. Mr. Sanford's office has said the change would make the agency more accountable and has called on legislators to send him the bill quickly.
Commission Chairman McKinley Washington said he had not seen the opinion but downplayed its significance.
"The attorney general is not always right," he said. "We'll just keep on doing what we're doing as far as getting our work done, and that's all we can do."
Commissioner Becky Richardson said the agency's attorneys would review the opinion. Billy McLeod, the commission's vice chairman, did not immediately return a message seeking comment.