Please confirm - what is the law for a NON-PROFIT....in giving employees cash or a cash gift card for Christmas?

Taxation? Is there a dollar-limit before it is taxed?
Does the employer report it as income
Does the employer withhold tax
Does the employee report it separately as a gift on
their year end Tax Return.

Thanks and Happy Holidays

The law is the same for non-profits as for any other organization. Unless it is de minimus, it is taxable as wages. If you are giving them cash or a gift card for a set dollar amount, yes, you must treat it as wages.

Gift cards/gift certificates, etc. are simply a replacement for cash and are always taxable and yes, it goes on the W-2 and yes, taxes must be withheld. Because it is on the W-2, it is not a "gift" as you are interpreting it. And here is the definition of "de minimus" (pg 6-7):
http://www.irs.gov/pub/irs-pdf/p15b.pdf