Section 7(h) of the Act does something the regular-rate exclusions covered in Chapter 7 do not: it lets an employer take extra premium pay that is already excluded from the regular rate and apply it, dollar for dollar, against the overtime compensation owed for that workweek. Not every excludable premium qualifies for this credit — only three narrow categories, described in section 7(e)(5), (6), and (7) of the Act, do. No other kind of extra pay, however generous, may be credited this way.

The three categories share a common thread: each pays extra because the employee worked more hours, or at a less desirable time, than an established baseline — never because of who the employee is or how well they performed. The baseline itself has to be real. Whether it is a daily or weekly hour ceiling, a set of special days, or a defined basic workday, it must come from an actual written or unwritten contract, agreement, handbook, policy, or established practice, not be invented after the fact to justify a lower true overtime rate.

The Wage and Hour Division polices the edges of this credit closely. If an employer artificially divides the normal workday into a “straight time” segment paid at one rate followed by a so-called “overtime” segment paid at a higher rate, the arrangement is treated as a device to contravene the statute's purposes, and the extra pay is folded back into the regular rate rather than credited toward overtime.