I just tried it manually and it seems to ignore the .git directory. I think it’s safe to assume it ignores all “hidden directories” (ones starting with a period ‘.’). I tried this on Linux, not sure if it works differently on other platforms.
I’d suggest you try it yourself, to confirm in your current setup if it works the same way. You can do this by going to an empty folder and initialising a git project (git init) then push that folder with butler, and download the uploaded zip file. In my case, the zip file was empty.