What Is the De Minimis Rule: Wage Law, Tariffs, and Taxes

The de minimis rule is a legal principle that tells courts and agencies not to enforce the law against violations so small they aren’t worth the cost of pursuing. The phrase comes from the Latin maxim de minimis non curat lex: the law does not concern itself with trifles. It shows up across tax law, wage-and-hour law, copyright, customs duties, government ethics, environmental cleanup liability, and securities reporting. Each area sets its own line for what counts as too small to matter, and those lines can move — as a recent overhaul of customs law shows.

Why the Rule Exists

The doctrine does two practical jobs. It keeps courts and agencies from spending limited resources on disputes where the cost of adjudication would far exceed any remedy. And it shields individuals and businesses from liability for the trivial, unavoidable imperfections that come with trying to comply with any detailed rule.

There is no single dollar amount or formula that makes something de minimis across the board. A judge looks at the context: the size of the harm, how often it happens, and whether enforcement would deliver anything meaningful. A deviation that no one actually suffers from often gets treated as not worth pursuing. The threshold shifts with the legal setting, and what passes as a trifle in one area can be serious in another.

Unpaid Work Time Under Federal Wage Law

One of the most common places workers run into the rule is unpaid time at the start or end of a shift. Under the Fair Labor Standards Act, employers sometimes argue they don’t owe wages for the few minutes an employee spends booting a computer, walking to a station, or shutting down equipment. The relevant federal regulation, 29 CFR § 785.47, allows employers to disregard “insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes.”¹

The regulation limits this to “uncertain and indefinite periods of time involved of a few seconds or minutes duration” where industrial realities make precise tracking impractical. And the same regulation cites case law holding that ten minutes of daily uncompensated work is not de minimis.¹ An employer can’t arbitrarily refuse to count regular or practically measurable working time.

The Three-Factor Test

Most federal courts weigh three factors, drawn from the Ninth Circuit’s decision in Lindow v. United States:

How hard is it to record the extra time? If an employer could have used a separate time clock, a software estimate, or another reasonable method, this cuts against calling the time de minimis.
How much total time is at stake in the aggregate? Seconds per shift add up to little; several minutes a day over months can add up to real wages.
How regular is the work? Daily, predictable off-the-clock tasks are much harder to excuse than something that happens once in a while.

The burden sits on the employer to prove the time qualifies. In the 2024 Ninth Circuit case Cadena v. Customer Connexx, LLC, the court reversed summary judgment for an employer where workers testified that booting up and shutting down could take more than ten minutes a day and the employer hadn’t explored available ways to estimate or record that time.

Some States Reject the Federal Approach

If you work in California, the federal rule may not help your employer. The California Supreme Court held in Troester v. Starbucks Corp. (2018) that the state’s wage-and-hour laws don’t incorporate the FLSA’s de minimis doctrine. A handful of other states, including Washington and Pennsylvania, have similarly limited or rejected it. Check your state’s own wage law before assuming small amounts of required work can go unpaid.

Tax-Free Employee Perks

The IRS uses the de minimis idea in Internal Revenue Code Section 132(e) to exclude certain small workplace perks from an employee’s taxable income. A de minimis fringe benefit is property or a service so small in value — considering how often similar perks are given — that accounting for it would be unreasonable or impractical.²

Common examples the IRS recognizes include occasional snacks and coffee in the breakroom, holiday gifts such as a turkey or gift basket, flowers or fruit for an illness or birthday, infrequent tickets to a sporting event, occasional meal money or cab fare when someone has to work unusual hours, limited personal use of an office photocopier, and personal use of an employer-provided cell phone when the phone was given for business reasons.³⁴

The IRS has ruled that items worth more than $100 can’t be considered de minimis even in unusual circumstances.³ Two categories never qualify no matter how small:

Cash. A $5 bill handed to an employee is taxable wages, because tracking cash is never administratively difficult. The only exception is occasional meal or transportation money so an employee can work an unusual, extended schedule, and the employee has to actually work the overtime.³
Gift cards redeemable for general merchandise. These function as cash equivalents and are always taxable. A certificate for a specific item of minimal value, given infrequently, may still qualify if tracking it would be impractical.³

Frequency matters as much as value. Free lunch every day is a regular meal program, not a de minimis perk. The same meal provided once during a late-night push likely qualifies. Employers who treat a routine benefit as de minimis risk payroll tax penalties.

The $20/$50 Rule for Federal Employees

Executive branch ethics regulations use a de minimis-style exception for gifts. Under 5 CFR § 2635.204, a federal employee may accept an unsolicited gift worth $20 or less per source per occasion, provided total gifts from that source stay at or under $50 in a calendar year.⁵ A few conditions apply:

Cash, stock, bonds, and certificates of deposit are not covered.⁵
If a gift is worth more than $20, the employee can’t pay the excess to bring it within the limit.
Gifts from a corporation and its individual employees all count toward the same $50 annual total.

Even where a gift fits within the limit, the regulation notes that declining is “never inappropriate and frequently prudent” if accepting could raise questions about impartiality.⁵

Copyright and Music Sampling

In copyright, the de minimis doctrine is a judge-made defense; it isn’t in the Copyright Act. Courts developed it to dismiss infringement claims where the amount of protected material used is so small no reasonable person would recognize it as coming from the original work. In Newton v. Diamond, the Ninth Circuit held that sampling three notes from a composition was too trivial to count as infringement.

Sound recordings are different, and federal courts don’t agree on how. The Sixth Circuit held in Bridgeport Music, Inc. v. Dimension Films that no de minimis exception exists for sound recording copyrights, meaning any unauthorized sample is infringement no matter how brief. The Ninth Circuit reached the opposite result in VMG Salsoul, LLC v. Ciccone, applying the doctrine to sound recordings. The Fifth Circuit has signaled disagreement with the Sixth Circuit’s stricter view. A clip considered too trivial to matter in one part of the country could support an infringement claim in another.

Low-Value Imports and the 2025 Suspension

For decades, the de minimis rule let low-value shipments enter the United States without duties or formal customs entry. Under 19 U.S.C. § 1321(a)(2)(C), goods imported by one person on one day with a fair retail value of $800 or less came in duty-free.⁶ This “Section 321” exemption fueled cross-border e-commerce by sparing customs from processing millions of small packages one at a time.⁷

That exemption is now effectively gone. A series of 2025 executive orders first suspended duty-free de minimis treatment for goods from China and Hong Kong, effective May 2, 2025, citing the synthetic opioid supply chain emergency.⁸ Executive Order 14324 then suspended it for shipments from all countries, effective August 29, 2025.⁹

As of 2026, low-value shipments that used to come in duty-free are subject to applicable duties and all standard admissibility requirements.¹⁰ The $800 figure still appears in the text of 19 U.S.C. § 1321 but has been suspended by executive action; a legislative amendment is scheduled to formally remove the $800 provision effective July 1, 2027.⁶ If you order from overseas or ship to U.S. customers, plan on duties applying regardless of value.

Superfund Cleanup Settlements

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, often called “Superfund”) imposes cleanup liability on parties connected to contaminated sites. Section 122(g) offers an expedited settlement for parties whose contribution to the contamination is de minimis. To qualify, the party’s contribution must be minor in volume compared to the rest of the hazardous substances at the site, and the materials it contributed must not be significantly more toxic or hazardous than the others. A small-volume contributor whose waste happens to be unusually toxic, or whose cleanup is unusually expensive, can still be denied de minimis status. Parties who do settle get a covenant not to sue from the government and protection from contribution claims by other responsible parties.¹¹

The 5% Myth in Financial Reporting

In financial reporting the concept travels under the name “materiality”: whether an error or omission in a company’s financial statements is large enough to influence a reasonable investor. A common misconception is that any error below 5% of a line item is automatically immaterial. The SEC’s Staff Accounting Bulletin No. 99 rejects that approach and says exclusive reliance on a percentage threshold is inappropriate.¹²

Companies and auditors have to weigh qualitative factors alongside size. A misstatement may be material if it masks a change in earnings trend, turns a reported loss into income or the reverse, hides a failure to meet analyst expectations, affects compliance with loan agreements or regulatory requirements, increases management’s bonus compensation, or involves concealment of an unlawful transaction. Even a numerically tiny misstatement can be material if it was intentional; the SEC has stated that deliberate “earnings management” through small misstatements is itself a significant indicator of materiality regardless of the dollar amount.¹² For public companies, there is no safe harbor for small errors.

1
eCFR. 29 CFR Part 785 – Hours Worked
2
U.S. Government Publishing Office. 26 USC 132 – Certain Fringe Benefits
3
Internal Revenue Service. De Minimis Fringe Benefits
4
Internal Revenue Service. Employer’s Tax Guide to Fringe Benefits (Publication 15-B)
5
eCFR. 5 CFR 2635.204 – Exceptions to the Prohibition for Acceptance of Certain Gifts
6
Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions
7
U.S. Customs and Border Protection. Section 321 Programs
8
The White House. Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports
9
U.S. Customs and Border Protection. E-Commerce Frequently Asked Questions
10
Federal Register. Notice of Implementation of the President’s Executive Order 14324 Suspending Duty-Free De Minimis Treatment for All Countries
11
Office of the Law Revision Counsel. 42 USC 9622 – Settlements
12
U.S. Securities and Exchange Commission. SEC Staff Accounting Bulletin No. 99 – Materiality