I would Like to Give Employees a Gift Certificate Over the Holidays. Is that Okay?

Yes, though there are issues that you should consider beforehand:

First, you should seek counsel from your tax advisor, because gift certificates that can be exchangeable for something of monetary value may not be so de minimus as to be excluded from wages — i.e. it might be subject to taxation. Second, watch out for discriminate selection of these gift certificates, so as not to run afoul of anti-discrimination laws. Third, for your exempt (from overtime pay requirements) employees you should be okay, but for your non-exempt employees, gift certificates may be includable in wages. There are exceptions to this for gifts given around the holidays or for other special occasions, which are discretionary, and not measured by hours worked, production or efficiency (years of service is okay though). If that is the case, then you might not need to treat the gift certificate as wages for overtime calculation purposes.

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