What is the effect of adding a per-hour shift differential to the base rate for eligible shifts?

• A. It Reduces the Overtime Rate
• B. It Is Paid Only as a Lump Sum at End of Week
• C. It Increases the Per-Hour Rate for Those Shifts
• D. It Is Used Solely for Tax Withholding

Answer: (C)

Shift differential is extra pay added to the hourly wage for workers on certain shifts. When you add this differential to the base rate for eligible shifts, the hourly wage for those hours increases. That’s why the correct answer is that it raises the per-hour rate for those shifts. It isn’t paid as a lump-sum at the end of the week, it doesn’t reduce the overtime rate on its own, and it isn’t used solely for tax withholding—the purpose is to boost earnings per hour for those shifts. (In some payroll setups, the differential may be included in the regular rate used to calculate overtime, but the direct effect described here is the higher hourly rate.)