How does FLSA 778.212 gift / Christmas bonus exclusion work?

29 U.S.C. § 207(e)(1) and 29 CFR 778.212 exclude sums paid as gifts, or payments in the nature of gifts at Christmas or on other special occasions as a reward for service, from the regular rate when the amounts are not measured by or dependent on hours worked, production, or efficiency. Such sums may not be credited toward overtime. Ordinary after-40 half-time still applies to hours worked.

Classic CFR two weeks' salary: $20 × five 10h + $1,600?

FLSA after-40 pay $1,100 + excluded $1,600 gift = $2,700. Ordinary /overtime/ is $1,100. Including the same $1,600 in the regular rate totals $2,860. Classic 778.213 with $100 is $1,200. Classic 778.222 with $75 is $1,175. 778.310 with a $75 lump is $1,182.50.

How is 778.212 different from 778.213 profit-sharing?

778.213 excludes bona fide Part 549 / 547 profit-sharing or thrift payments under § 7(e)(3)(b). 778.212 is the § 7(e)(1) gift / Christmas / special-occasion path, with the CFR two-weeks-salary example and longevity add-ons still qualifying when not pursuant to contract.

What if the bonus is measured by hours or pursuant to contract?

Then it is not in the nature of a gift. Check measured-by-hours or pursuant-to-contract to include the dollar in the regular rate and recompute extra half-time (classic same punches → $2,860).

Five 8h + $1,600 with no overtime week?

Straight $800 + excluded $1,600 = $2,400 versus /overtime/ $800. There is no overtime premium, but the qualifying gift is still paid on top and stays out of any RR computation.

FLSA 778.212 Gifts / Christmas Bonuses — Excluded from Regular Rate

How 778.212 pays

Exclusion of the gift, not of the hours. Section 778.212 implements § 7(e)(1): gift and Christmas / special-occasion payments in the nature of gifts stay out of the regular rate and cannot be credited toward statutory overtime. Hours worked still earn ordinary extra half-time after 40 at the typed rate. Total = FLSA after-40 base + gift.

CFR two weeks' salary example. A Christmas bonus of two weeks' salary to all employees, plus an equal additional amount for each 5 years of service, still qualifies when not pursuant to contract — even if paid with regularity so employees expect it, and even if amounts vary with salary or length of service.

Not a gift when geared to wages. If the payment is measured by or dependent on hours worked, production, or efficiency — or is pursuant to contract so the employee has a legal right to it — the exclusion is off and the dollar is included in RR under the 778.209 path.

Not 778.213. Profit-sharing / thrift under 778.213 is a separate § 7(e)(3)(b) / Parts 549 & 547 exclusion (classic $100 → $1,200). 778.212 is the gift path with the two-weeks-salary classic.

Classic · $20 · five 10h · $1,600 two-weeks gift → $2,700 (vs /overtime/ $1,100 · include-in-RR $2,860 · 778.213 $100 $1,200 · 778.222 $75 $1,175 · 778.310 $75 $1,182.50).
Measured-by-hours / pursuant-to-contract / contrast include · same $1,600 → $2,860.
Five 8h · $1,600 (no OT week) → $2,400 (vs /overtime/ $800).
$0 gift → $1,100 (ordinary after-40).
Service 10 years (2 + 2 weeks = $3,200) → $4,300.

Sources

29 CFR § 778.212 — Gifts, Christmas and special occasion bonuses (Cornell LII, HTTP 200)
29 CFR § 778.212 — eCFR current (HTTP 200)
29 U.S.C. § 207(e)(1) — sums paid as gifts (HTTP 200)
29 CFR § 778.200 — Inclusion / exclusion / crediting framework (HTTP 200)
29 CFR § 778.211 — Discretionary bonuses cousin (HTTP 200)
29 CFR § 778.213 — Profit-sharing cousin (HTTP 200)
WHD Fact Sheet #56A — Regular rate under the FLSA (HTTP 200)
/flsa-778-213-profit-sharing/ — 778.213 Part 549/547 cousin
/flsa-778-222-predictability/ — 778.222 schedule-premium cousin
/overtime/ — ordinary after-40 baseline

FAQ

Classic five 10h + $1,600 two-weeks gift?

$1,100 FLSA after-40 + $1,600 excluded gift → $2,700 vs /overtime/ $1,100 vs include-in-RR $2,860 vs 778.213 $100 $1,200 vs 778.222 $75 $1,175.

Same as /flsa-778-213-profit-sharing/?

No. 778.213 is bona fide Part 549 / 547 profit-sharing or thrift under § 7(e)(3)(b). 778.212 is the § 7(e)(1) gift / Christmas path with the CFR two-weeks-salary example.

Measured by hours or pursuant to contract?

Then it is not in the nature of a gift — include in RR (classic same punches → $2,860).

Longevity / service years?

CFR allows an equal additional amount for each 5 years of service. Ten years → 2 + 2 weeks = $3,200 on a $20/h scale → total $4,300 with five 10h.

No overtime in the week?

Five 8h + $1,600 → $2,400 vs /overtime/ $800. The gift is still paid on top and stays excluded.