18:0802(98)CA - Navy, Office of the Secretary, Washington, DC and Naval Underwater Systems Center, Newport, RI and Federal Union of Scientists and Engineers / NAGE, Local R1-144; Navy, Office of the Secretary, Washington, DC and Naval Underwater Systems Center, Newport, RI and Federal Union of Scientists and Engineers / NAGE, Local R1-134 -- 1985 FLRAdec CA



[ v18 p802 ]
18:0802(98)CA
The decision of the Authority follows:


 18 FLRA No. 98
 
 DEPARTMENT OF THE NAVY 
 OFFICE OF THE SECRETARY 
 WASHINGTON, D.C. AND 
 DEPARTMENT OF THE NAVY 
 NAVAL UNDERWATER SYSTEMS CENTER 
 NEWPORT, RHODE ISLAND 
 Respondents
 
 and 
 
 FEDERAL UNION OF SCIENTISTS AND 
 ENGINEERS/NAGE, LOCAL R1-144 
 Charging Party
 
                                            Case No. 1-CA-30010
 
 and 
 
 DEPARTMENT OF THE NAVY 
 OFFICE OF THE SECRETARY 
 WASHINGTON, D.C. AND 
 DEPARTMENT OF THE NAVY
 NAVAL UNDERWATER SYSTEMS CENTER 
 NEWPORT, RHODE ISLAND 
 Respondents
 
 and 
 
 NATIONAL ASSOCIATION OF GOVERNMENT
 EMPLOYEES, LOCAL R1-134 
 Charging Party
 
                                            Case No. 1-CA-30011
 
                            DECISION AND ORDER
 
    The Administrative Law Judge issued the attached Decision in the
 above-entitled proceeding, finding that Respondent Department of the
 Navy had not engaged in the unfair labor practices alleged in the
 consolidated complaint and recommending that the complaint be dismissed
 as to that Respondent.  The Judge further found that Respondent Naval
 Underwater Systems Center had engaged in the unfair labor practices
 alleged in the consolidated complaint and recommended that it be ordered
 to cease and desist therefrom and take certain affirmative action.
 Thereafter, the Respondents filed exceptions to the Judge's Decision,
 and the General Counsel filed an opposition to the Respondent's
 exceptions.
 
    Pursuant to section 2423.29 of the Authority's Rules and Regulations
 and section 7118 of the Federal Service Labor-Management Relations
 Statute (the Statute), the Authority has reviewed the rulings of the
 Judge made at the hearing and finds that no prejudicial error was
 committed.  The rulings are hereby affirmed.  Upon consideration of the
 Judge's Decision and the entire record, the Authority hereby adopts the
 Judge's findings, conclusions and recommendations only to the extent
 consistent herewith.
 
    The Judge concluded that Respondent Naval Underwater Systems Center
 (NUSC) violated section 7116(a)(1) and (5) of the Statute when it
 unilaterally changed the method of delivery of paychecks to new unit
 employees from hand delivery to mail delivery without bargaining on the
 decision, or the impact and implementation of the decision, with the
 Federal Union of Scientists and Engineers/NAGE, Local R1-144 and the
 National Association of Government Employees, Local R1-134, the
 respective exclusive representatives of NUSC professional employees and
 NUSC nonprofessional general schedule employees.  Subsequent to the
 issuance of the Judge's Decision in this case, the Authority issued its
 decision in Federal Employees Metal Trades Council, AFL-CIO and
 Department of the Navy, Mare Island Naval Shipyard, Vallejo, California,
 16 FLRA No. 88 (1984), petition for review filed, No. 85-7039 (9th Cir.
 Jan. 22, 1985), wherein it found that an agency's selection of the
 method of paycheck distribution concerns the methods and means of
 performing work within the meaning of section 7106(b)(1) of the Statute
 /1/ and thus is negotiable only at the election of the Agency.  /2/
 Thus, the Authority finds that Respondent NUSC's refusal to bargain
 concerning a change in the method of paycheck delivery did not
 constitute a violation of section 7116(a)(1) and (5) of the Statute.
 
    In addition, the Authority finds that although NUSC refused to
 bargain with the Union over the procedures to be observed in
 effectuating the change and regarding appropriate arrangements for
 adversely affected employees, pursuant to section 7106(b)(2) and (3) of
 the Statute, /3/ no such duty to bargain arose herein inasmuch as the
 impact or reasonably foreseeable impact of the change in working
 conditions on bargaining unit employees was no more than de minimis.
 Department of Health and Human Services, Social Security Administration,
 16 FLRA No. 103 (1984) and Department of Health and Human Services,
 Social Security Administration, Chicago Region, 15 FLRA No. 174 (1984).
 The Authority makes such finding because the change from hand delivery
 of paychecks to mail delivery would affect only newly hired employees
 and would not apply to the established pay practices of unit employees.
 
    Finally, the Authority adopts the Judge's conclusion that the
 complaint must be dismissed as to Respondent Department of the Navy,
 because the Authority has determined that the decision to change the
 method of paycheck delivery does not give rise to a duty to bargain over
 the substance of such change, and therefore the Department of the Navy
 did not prevent Respondent NUSC from fulfilling any statutory bargaining
 obligation with respect thereto.  Accordingly, the consolidated
 complaint shall be dismissed in its entirety.
 
                                   ORDER
 
    IT IS ORDERED that the consolidated complaint in Case Nos. 1-CA-30010
 and 1-CA-30011 be, and it hereby is, dismissed.  
 
 Issued, Washington, D.C., June 28, 1985
 
                                       Henry B. Frazier III, Acting
                                       Chairman
                                      William J. McGinnis, Jr., Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 
 
 
 -------------------- ALJ$ DECISION FOLLOWS --------------------
 
    Geoffrey D. Spinks, Esq.
    For the Respondents
 
    Daniel Sutton, Esq.
    For the General Counsel
 
    Before:  ELI NASH, JR., Administrative Law Judge
 
                                 DECISION
 
                           Statement of the Case
 
    Pursuant to a Consolidated Complaint and Notice of Hearing issued on
 January 12, 1983 by the Regional Director for the Federal Labor
 Relations Authority, Boston, Massachusetts, a hearing was held before
 the undersigned on March 7, 1983 at Newport, Rhode Island.
 
    This proceeding arose under the Federal Service Labor-Management
 Relations Statute (herein called the Statute).  It is based on amended
 charges filed on January 5, 1983 by the National Association of
 Government Employees, NAGE, Local R1-134 (hereinafter called Local
 R1-134) and, by the Federal Union of Scientists and Engineers, NAGE,
 Local R1-144 (hereinafter called Local R1-144) against the Department of
 the Navy, Office of the Secretary, Washington, D.C., Naval Underwater
 Systems Center, Newport, Rhode Island (herein called Respondent,
 Respondent NUSC or Respondent Navy).
 
    The Complaint alleged that on or about October 1, 1982, Respondent
 unilaterally changed existing conditions of employment by implementing a
 policy or requiring bargaining unit employees hired on or after October
 1, 1982 to have their payroll checks mailed directly to their home
 address or a financial institution and has refused to bargain with
 either Local R1-134 or R1-144 concerning the change or the
 implementation of such change.
 
    Respondent's Answer denied the Commission of any unfair labor
 practices.
 
    All parties were represented at the hearing.  Each was afforded full
 opportunity to be heard, to adduce evidence, and to examine as well as
 cross-examine witnesses.  Thereafter, briefs were filed with the
 undersigned which have been duly considered.  /4/
 
    Upon the entire record herein, from my observation of the witnesses
 and their demeanor, and from all of the testimony and evidence adduced
 at the hearing, /5/ I make the following findings and conclusions:
 
                             Findings of Fact
 
    The essential facts are as follows:
 
    Local R1-144 is and, at all times material herein has been the
 certified exclusive representative for a bargaining unit consisting of
 all Respondent NUSC's professional employees.
 
    Local R1-134 is and, at all times material herein has been the
 exclusive representative for a bargaining unit consisting of all of
 Respondent NUSC's nonprofessional general schedule employees.
 
    Respondent NUSC's employees are paid on a bi-weekly basis with the
 Thursday following the end of the payroll period being designated as pay
 day.  For several years prior to October 1, 1982, Respondent NUSC
 maintained a practice of hand delivering payroll checks to employees at
 their worksites on payday.  Having received their payroll checks at the
 worksite, employees could, on payday, readily convert those checks to
 cash during their normal workday either at an on-site check cashing
 service provided by a credit union or by visiting a local bank or credit
 union during a break.
 
    About 2 or 3 years ago, Respondent NUSC implemented a new payroll
 disbursing system called "Pay Deposited Quicker" (hereinafter called
 PDQ).  Under that system the individual employee had the option of
 authorizing Respondent NUSC's payroll or disbursing office to mail his
 or her payroll check directly to a financial institution or to a nonwork
 address.  Prior to October 1, 1982, participation in PDQ was voluntary
 for all employees.
 
    On August 4, 1982, S. R. Fisher, the Head of Respondent NUSC's Labor
 and Employee Management Relations Division, issued a memorandum
 entitled, "New Policy on Pay Checks" and forwarded two documents to the
 Presidents of Locals R1-134 and R1-144 for their information advising
 that any comments should be received by August 9, 1982.  One of the
 enclosures was a July 1982 message from the Chief of Naval Operations
 directing Navy activities to review a "SECNAV Instruction 7200.17 of 6
 October 1981" and ". . . take appropriate action to inform all new hires
 beginning 1 October 1982 of this recent pay distribution policy, which
 requires pay to be forwarded to a designated financial institution or
 mailed to a nonwork address."
 
    By memorandum dated August 9, 1982 and September 1, 1982,
 respectively Locals R1-144 and R1-134 requested Respondent NUSC bargain
 concerning the proposed change in the distribution of payroll checks.
 Thereafter, Respondent NUSC refused to bargain with either Local R1-134
 or R1-144 over either the decision to discontinue the practice of hand
 delivery of payroll checks at the worksite for employees hired on or
 after October 1, 1982 or the impact and implementation of such change.
 In response to Local R1-134, Respondent NUSC explained that its refusal
 to bargain was based on its contention that nothing in the applicable
 collective bargaining agreement specifically required hand delivery of
 payroll checks to employees at their worksites;  whereas Local R1-144,
 after initially being told that bargaining over the proposed change
 would occur, was advised that Respondent NUSC had decided ". . . that
 even though this (the elimination of hand delivery of payroll checks at
 the worksite) was a change (of) an existing personnel policy and
 practice, it was not a change which materially and substantially
 affected employees."
 
    On or about October 1, 1982, Respondent NUSC unilaterally implemented
 the new policy of mailing payroll checks for all bargaining unit
 employees hired on or about October 1, 1982 to a nonwork address.  At
 the time of the hearing, there were approximately 109 employees in the
 nonprofessional bargaining unit represented by Local R1-134 and 22
 employees in the professional bargaining unit represented by Local
 R1-144 who have been affected by the new policy.
 
                                  ISSUES
 
    Whether agency management is obligated to bargain with an exclusive
 representative of its employees concerning a decision to eliminate hand
 delivery of payroll checks to bargaining unit employees at their
 worksites and the impact and implementation of such decision;
 
    Whether the implementation of the new pay policy in the instant cases
 constituted a change in established conditions of employment which had a
 substantial adverse impact on bargaining unit employees so that
 Respondent NUSC was obligated to provide the Charging Party Unions with
 an opportunity to bargain concerning such change and its impact and
 implementation;
 
    Whether Respondent NUSC was relieved of its statutory bargaining
 obligations with regard to the new pay policy by virtue of the fact that
 such policy was implemented pursuant to instructions issued by
 Respondent Navy;
 
    If Respondent NUSC was not relieved of its statutory bargaining
 obligations with regard to the new pay policy, whether Respondent Navy
 violated section 7116(a)(1) and (5) of the Statute by preventing
 Respondent NUSC from fulfilling such obligations;  and
 
    Whether Respondent NUSC violated section 7116(a)(1) and (5) of the
 Statute by refusing to bargain with the Charging Parties over the impact
 and implementation of the new pay policy.
 
                                Discussion
 
    A. Responsibility of Respondents
 
    The Consolidated Complaint alleges that the Respondent violated
 section 7116(a)(1) and (5) of the Statute by unilaterally instituting
 changes in existing working conditions without bargaining about those
 changes or their impact and implementation.  General Counsel, in his
 brief, insists that Respondent Navy violated the Statute by preventing
 Respondent NUSC from fulfilling its statutory bargaining obligation with
 regard to its decision to eliminate hand delivery of payroll checks to
 new employees at their worksite.  Being contingent on Respondent NUSC's
 actions, the violation, in the matter, would have occurred on October 1,
 1982, at which time NUSC implemented the new pay policy without
 providing the local Unions an opportunity to bargain.  Even assuming
 that Respondent NUSC is not liable for Respondent Navy's refusal to
 bargain about the decision to change the pay policy, the General Counsel
 urges that Respondent NUSC is liable for its own refusal to bargain
 about the change and the impact and implementation of the new pay
 policy.
 
    Respondent Navy rejects all attempts to attribute any violation of
 section 7116(a)(1) and (5) to it and, in essence, contends that it is
 not responsible for those violations alleged against Respondent NUSC.
 In so doing, it makes, among other arguments, three basic points.
 First, it argues that section 4.b.(1) and (2) of the SECNAV Instruction
 7200.17 stipulates that hand delivery of paychecks be discontinued only
 where it is feasible to do so.  Respondent Navy thereby suggests that
 circumstances exist in which it may not be feasible to discontinue the
 practice of delivering paychecks by hand and thus no activity is
 directed to implement the policy where it is not feasible to do so.
 Second, Respondent Navy maintains that section 5.b.(4), (5), and (9) of
 the Instruction recognizes that some constraints on the change may
 result from bargaining agreements already in effect.  For example,
 section 5.b.(5) stipulates that hand delivery of pay and leave earnings
 for current employees be discontinued only if current labor agreements
 and resources permit.  Respondent Navy also advises that such language
 demonstrates that each activity retains the discretion necessary to
 fulfill its collective bargaining obligations.  Consequently, it argues
 that it should not be liable for an activity's breach of this
 obligation.  Finally, Respondent Navy urges that it published and
 distributed notification of the proposed changes far in advance of the
 implementation date to the activities.  With respect to the pre-hire
 employee's provision, Respondent Navy allegedly gave activities 1 year
 lead time to make the change.  In situations where possible past
 practices or contrary provisions of a collective bargaining agreement
 might be involved, Respondent Navy allegedly gave activities a lead time
 of 4 years.  Even within this framework, the time limits provided the
 activities seemingly were flexible.
 
    Based on those reasons, and the fact that it had no existing
 exclusive relationship with the Union's which would give rise to a
 bargaining obligation Respondent Navy concluded that it cannot be held
 responsible for the activity's failure to bargain with the local Unions.
 
    The principle is well-settled is that "the acts and conduct of higher
 level agency management may constitute an unfair labor practice when
 such conduct prevents agency management at the level of exclusive
 recognition from fulfilling its bargaining obligation under the
 Statute." Department of Defense Schools, 11 FLRA 597 (1983).  In a case
 where an agency directs an activity to carry out a change in conditions
 of employment without bargaining with the union and the activity has "no
 choice but to follow the dictates" of the agency, the Authority has held
 the agency exclusively liable for the violation.  Department of the
 Interior, Water and Power Resources Services, Grand Coulee Project,
 Grand Coulee, Washington and Office of the Secretary, Department of the
 Interior, Washington, D.C., 9 FLRA 385 (1982).  The Authority reached a
 similar conclusion in a case where an agency Regional Director issued a
 memorandum to Bureau Chiefs and District Managers directing them to
 implement immediately a policy which altered an established condition of
 employment.  There the District Manager was not found responsible for
 the unilateral change since the action "merely complied with a direction
 from agency management at a higher level;" the action was considered to
 be simply ministerial.  Social Security Administration and Department of
 Health, Education and Welfare, Region VI, Social Security
 Administration, Galveston, Texas, 10 FLRA 33 (1982).  But, in a case
 where an agency merely advised an activity that a contract proposal
 submitted by the union was nonnegotiable, the activity, not the agency
 was held responsible for a violation of section 7116(a)(1) and (5) of
 the Statute.  Kansas Army National Guard and National Guard Bureau, 10
 FLRA 303 (1982).  Where a particular subject matter is nonnegotiable
 because, for example, it falls within management's rights under section
 7106, bargaining over the implementation and impact of the changes will
 be required.  Social Security Administration, 8 FLRA 517 (1982), seeks
 to resolve the question of whether the blame for the refusal to bargain
 should fall on the agency or on the activity based on the Grand Coulee
 case, supra.
 
    Mainly, Respondent Navy contends that blame should rest on the
 shoulders of the activity officials, if anywhere, because there was an
 option to bargain under the terms of the SECNAV 7200.17 Instruction.
 General Counsel, contrarily, declares that Respondent Navy is liable for
 its refusal to bargain about the change in pay delivery procedures by
 preventing Respondent NUSC from fulfilling its bargaining obligation
 concerning the new policy and Respondent NUSC is liable for its refusal
 to bargain about the change in paycheck procedure and impact and
 implementation of this new policy.
 
    Respondent Navy's arguments with respect to section 4.b.(2) and
 5.b.(5) is that changes in the method of payment should be made only
 "where feasible and to the maximum extent possible within current labor
 agreement and resource constraints." Respondent Navy makes the point
 that this discretionary language applies only to changes in the pay
 distribution program for current employees and contains no language
 dictating changes in the pay distribution procedures for employees hired
 on or after October 1, 1982.  Section 5.b.(5) states that all Navy
 activities have the responsibility for:
 
          Supporting the establishment of civilian pay distribution by
       PDQ/Direct Deposit or mail upon entry of all civilian employees
       hired by any (Department or Navy) activity on or after 1 October
       1982.
 
 The Complaint alleges that Respondent Navy violated the Statute by
 refusing to bargain in good faith concerning the paycheck distribution
 changes involving employees hired on or after October 1st-- in other
 words, new employees.  The General Counsel maintains that Respondent
 NUSC "had no choice but to ministerially implement the provisions of the
 (SECNAV Instructions)" with respect to new employees.  I do not agree.
 Section 5.b.(5) relating to new employees does not direct activities to
 evade any bargaining obligation by establishing October 1, 1982 as the
 cut off date on PDQ for new employees.  It does, however, make
 activities responsible for "supporting" that date as the optimum date.
 Thus, it is found that the language of the SECNAV Instruction, without
 more does not establish that Respondent Navy interfered with or
 prevented Respondent NUSC from fulfilling its bargaining obligation.
 
    I accept, therefore, Respondent Navy's position that its activities
 all had discretion to bargain concerning the change and that it gave the
 activities sufficient time to bargain about the proposed changes.
 Failing to bargain, therefore, must as Respondent Navy maintains fall
 squarely on the activity's shoulders particularly, since its
 instructions tended to encourage bargaining where current labor
 agreements permitted.  This factor distinguishes the instant matter from
 Social Security Administration, Galveston, Texas, 10 FLRA 33 (1982),
 where the Regional Commissioner directed District and Branch Managers to
 make certain changes only 12 days in advance of the changes sought,
 thereby preventing them from bargaining with the local unions.
 
    Nothing in the instant record disclosed that Respondent Navy did
 anything more than issue the new regulation.  If Defense Logistics
 Agency, infra., is followed such action in and of itself, did not
 prevent the activity from bargaining with local unions even for new
 employees.  For this singular reason, it is found that Respondent Navy's
 action in merely issuing the regulation involved herein, without more,
 did not violate the Statute.  Accordingly, it is found and concluded
 that the Complaint against Respondent Navy should be dismissed.  /6/
 
    B.  Compelling Need
 
    At the hearing and in its brief, Respondent maintains that compelling
 need determinations should be made only under negotiability provisions
 of section 7117(b) of the Statute.  These provisions, Respondent argues,
 prohibit a labor union from raising the issues under unfair labor
 practice procedures and likewise prevents an Administrative Law Judge
 from making such determinations with the General Counsel present.
 
    Respondent apparently assumes that the existence of a regulation such
 as the SECNAV Instruction automatically creates a bar to negotiations on
 counter-proposals until the Authority determines that a compelling need
 does not exist for the regulation.  Respondent further pointed out that
 a "no compelling need" determination issued by the Authority would not
 retroactively render a refusal to bargain improper, but prospectively
 the regulation could no longer serve as a bar to negotiation.  The
 result according to Respondent is, that even if the Authority were to
 rule that there was no compelling need to alter the pay distribution
 procedures, it could not be found liable for committing an unfair labor
 practice.
 
    The General Counsel characterizes Respondent's reliance on section
 7117 of the Statute merely as an effort to evade its responsibility to
 bargain with the Unions.  In so doing, he urges that section 7117 was
 designed to facilitate and not to frustrate the collective bargaining
 process.  In consequence, he would distinguish this case from section
 7117(b)(1) proceedings because there is no collective bargaining
 agreement at issue.  Rather, he perceives the matter only as a
 unilateral change in conditions of employment to which "compelling need"
 is asserted as an unfair labor practice defense.  The General Counsel
 sees no reason to preclude the Authority from making a compelling need
 determination within the context of an unfair labor practice proceeding.
  State of Nevada National Guard, 7 FLRA 245 (1981).  For these reasons,
 the General Counsel asserted that the Authority, with the Administrative
 Law Judge delegated to conduct unfair labor practice proceedings on its
 behalf, has jurisdiction to evaluate a respondents' compelling need
 defense in unfair labor practice proceedings.  Contra U.S. Air Force
 (Washington, D.C.) and U.S. Air Force, Electronic Systems Division,
 Hanscom Air Force Base (Bedford, MA), Case No. 1-CA-853, OALJ-83-20
 (1982).  Based on this interpretation of precedent and the facts of the
 case, the General Counsel urges that Respondents' compelling need
 defense should be rejected.
 
    Since Respondent did not produce any evidentiary support for its
 compelling need assertions the General Counsel emphasized that no
 compelling need in fact exists and Respondent NUSC therefore, was not
 relieved of its bargaining obligation under the Statute simply because
 the new pay policy was implemented pursuant to instructions issued by
 the Respondent Navy.  Defense Logistics Agency, et. al., 12 FLRA 424
 (1983) decided after the hearing in the matter, plainly states that the
 determination of whether or not a compelling need exists can
 theoretically take place either in an unfair labor practice or in a
 negotiability proceeding.  However, when an exclusive representative has
 selected the unfair labor practice forum and agency management raises as
 an affirmative defense that it refused to bargain because there was a
 compelling need for the regulation, the compelling need issue must
 necessarily be decided in the unfair labor practice proceeding.  Under
 these circumstances, a respondent is required to come forward with
 affirmative support for its assertion in an unfair labor practice
 proceeding, just as it would in a negotiability proceeding.
 Furthermore, the decision suggests that a respondent should raise the
 compelling need issue in its answer to the complaint, rather than in its
 post-hearing brief.  However, the Authority considered, in that case,
 whether the record provided sufficient proof for the existence of a
 compelling need.
 
    Section 2424.11 of the Authority's Rules and Regulations (5 CFR
 2424.11 (1981)) provides the criteria for determining the compelling
 need for agency rules and regulations under the negotiability procedures
 established in section 7117(a)(2).  These criteria also apply to
 compelling need determinations made unfair labor practice proceedings.
 State of Nevada National Guard, supra, and are as follows:
 
    A rule or regulation demonstrates the existence of a compelling need
 if one of the following criteria is met:
 
          (a) The rule or regulation is essential, as distinguished from
       helpful or desirable, to the accomplishment of the mission or the
       execution of functions of the agency or primary national
       subdivision in a manner which is consistent with the requirements
       of an effective and efficient government.
 
          (b) The rule or regulation is necessary to insure the
       maintenance of basic merit principles.
 
          (c) The rule or regulation implements a mandate to the agency
       or primary national subdivision under law or other outside
       authority, which implementation is essentially nondiscretionary in
       nature.
 
 5 CFR section 2424.11 (1981).  Under the criterion (a), an agency must
 establish that its regulation is essential, as distinct from being
 merely helpful or desirable, by showing that the objective sought in the
 regulation could not have been achieved by any other means.  American
 Federation of Government Employees, AFL-CIO, Local 3804, 7 FLRA 217
 (1981).  Similarly, under criterion (b), an agency must show that its
 regulation is necessary as the only means of attaining that objective.
 If a respondent does not prove that it had a compelling need for
 refusing to bargain about changes made as a result of an agency-wide
 rule or regulation and there is no merit to any of its other defenses,
 respondent's action constitutes an unfair labor practice within the
 meaning of the Statute.  Defense Logistics Agency, supra.
 
    In light of the Defense Logistics Agency decision, the General
 Counsel, in my view, successfully disposed of Respondent's argument that
 a compelling need determination can only be made under the negotiability
 provisions of section 7117 of the Statute.  Clearly such determinations
 now can be made within the context of an unfair labor practice
 proceeding and the unfair labor practice forum is the proper tribunal
 for agency management to raise as an affirmative defense that it refused
 to bargain on the basis that a compelling need existed for the
 regulation in question.  Defense Logistics Agency, supra.
 
    Consistent with its belief that the compelling need issue has no
 place in an unfair labor practice proceeding, Respondent did not raise
 the issue as an affirmative defense in response to the Complaint nor did
 it attempt to present evidence bearing on the compelling need issue.
 Neither was this defense raised in any of the memoranda exchanged
 between the parties prior to the hearing.  Furthermore, no facts were
 alleged either at the hearing or in the post-hearing brief nor did
 Respondent at any time seek to substantiate a compelling need,
 affirmative defense.  In its brief, however, Respondent attempted to
 illustrate that it had important reasons to seek the changeover from
 worksite delivery of the paychecks to automatic deposit of employee
 checks.  According to Respondent's brief, dramatic savings ($4.5 million
 per year) is the cost of paying employees if 180,000 employees salaries
 were mailed directly to each financial institution (using master checks
 for each institution) would result.  Further, the use of electronic
 funds transfer would provide for better cash management and serves as a
 savings in interest costs.  Although none of these savings is assured if
 the Navy mails the paychecks to the employees' homes, it does, however,
 demonstrate the potential for saving the government money if employees
 readily adopt the PDQ.
 
    To determine whether or not these reasons constitute a compelling
 need to make changes in the regulation without bargaining with the
 exclusive representative, I turn to a consideration of the three crucial
 criteria provided in section 2424.11 of the Authority's Rules and
 Regulations.  According to the first criterion, the regulation must be
 essential and not merely helpful or desirable.  Clearly, the practice of
 directly depositing employee salaries at the banks where employees have
 their accounts would save the Navy money in terms of printing checks and
 distributing them.  But it is controvertible whether mailing checks to
 employees' homes, which remains one of the options under the SECNAV
 Instruction, really saves the Navy any money.  In this regard, there are
 still costs associated with printing the checks, providing and stuffing
 the envelopes and mailing the checks to employees' homes.  Leaving aside
 these points, serious doubts are raised when considering whether the
 program is essential to the Navy.  In short, although the program seems
 helpful, it has not been established that it is essential.  Furthermore,
 in terms of the second criterion, there is no substantiation that the
 program is necessary for the Department of the Navy to insure the
 maintenance of basic merit principles.  There may well be alternative
 methods which would save the Department of the Navy money in disbursing
 employee salaries.  The last criterion, concerning implementation which
 is essentially nondiscretionary in nature, is in no manner supported by
 any evidence.  Accordingly, and for the above reasons, it is found and
 concluded that the changes announced in the SECNAV Instruction do not
 warrant a finding that a compelling need for the regulation existed.
 
    C. Section 7116(a)(1) and (5) Violation
 
    The Statute requires notice to exclusive bargaining representatives
 of proposed changes of conditions of employment and, upon request, good
 faith bargaining.  An agency or its activity is not free to unilaterally
 change conditions of employment either through memoranda or a
 regulation, except as provided by section 7117 of the Statute.  Under
 section 7117, an agency is not required to bargain about a
 Government-wide rule or regulation;  nor is it required to bargain about
 an agency-wide rule or regulation for which a compelling need has
 already been found.  /7/ See National Treasury Employees Union, 9 FLRA
 983 (1982).  It is also well-established that conditions of employment
 include those established by contract, as well as those established
 through past practices, the result of tacit or informal agreement.
 Department of Defense, Department of the Navy, Polaris Missile Facility
 Atlantic, Charleston, South Carolina, 6 FLRA 372 (1981), citing
 Department of the Navy, Naval Underwater Systems Center, Newport Naval
 Base, 3 FLRA 413 (1980).  In this regard, "a practice will be considered
 to have ripened into a term or condition of employment if it has been
 consistently exercised for an extended period of time with the knowledge
 of respondent's supervisors." As a consequence, management is often
 required to negotiate about conditions of employment whose terms may not
 be expressly stated in the contract between the parties.
 
    The material facts reveal that the two local Unions involved herein
 were notified concerning proposed changes in the distribution of payroll
 checks and both requested to bargain about the proposed changes.  The
 facts also disclose that subsequently, Respondent NUSC met with
 representatives from both Unions to discuss the SECNAV Instruction, but
 refused to bargain either on the change in the pay procedures or on the
 impact and implementation of the change.  Further, by letter dated
 October 5, 1982, Respondent NUSC explained that nothing in the current
 agreement between Local R1-134 and Respondent NUSC required employees to
 receive their paychecks via hand delivery so the change was, therefore,
 permissible.  Similarly, in a letter dated October 6, 1982, Respondent
 refused to negotiate with Local R1-144 representatives because the
 change, though it represented a change in an existing personnel policy
 and practice, did not materially and su0stantially affect employees.
 
    As already noted, although the established practice of paying
 employees at their worksite was not a matter of contract the a.tivity is
 not necessarily released from its obligation to bargain.  See Polaris
 Missile Facility Atlantic, supra.  Clearly, Respondent NUSC refused to
 negotiate with either R1-134 or R1-144 about changing the practice of
 hand delivering the employee's paychecks.
 
    Although the Authority has not, to date, addressed the question as to
 the extent of an agency's bargaining obligation with regard to a
 decision to alter a practice of hand delivering payroll checks to
 bargaining unit employees at their worksites, Administrative Law Judge
 Devaney recently considered a similar issue in United States Department
 of Defense, Department of the Army, McAlester Army Ammunition Plant,
 Case No. 6-CA-1041, OALJ-82-77 (1982), exceptions filed (FLRA May 30,
 1982).  There, the activity decided to eliminate the traditional
 practice of providing bargaining unit employees with the option of
 receiving hand delivery of their payroll checks at their worksites.
 While the activity therein, notified the exclusive representative of
 this change, it asserted that the decision was nonnegotiable in that it
 involved the exercise of reserved "management rights" under section 7106
 of the Statute and that its bargaining obligation was limited to the
 impact and implementation of the change.  Judge Devaney rejected the
 activity's assertions of nonnegotiability (i.e., that the decision to
 eliminate hand delivery involved the activity's right under section
 7106(a)(1) of the Statute to determine its budget;  OALJ-82-77 at 18-24;
  or internal security;  OALJ-82-77 at 24-27) and concluded that the
 activity had refused to bargain over the decision to change an
 established condition of employment in violation of section 7116(a)(1)
 and (5) of the Statute.  In reaching this conclusion, Judge Devaney
 stated:
 
          Pay practices are "conditions of employment" within the meaning
       of the Statute.  Indeed, other than employment itself, no other
       matter is of more immediate, direct, or personal concern to each
       employee than pay practices.  Specifically, the hand delivery of
       paychecks on the premises of payday had been an established
       condition of employment since the inception of the Plant in 1941
       and had been continued without change from the date the Department
       of the Army assumed control on October 1, 1977.  In connection
       therewith, a bank provided facilities, on the premises, to cash
       paychecks on payday.  Of course, employees relied on receipt of
       their checks on payday and on the assurance that they could
       convert those checks to cash on payday.  Mailing of paychecks,
       whether to a home address or to a bank, altered the prior
       practice, frequently, as the record shows, to the considerable
       inconvenience and expense to employees.
 
 (Quotations in original) OALJ-82-77 at 22.  In spite of Respondent's
 urging to the contrary, his conclusions, in my opinion, not only find
 support in a logical reading of the Statute, but in a substantial body
 of law developed in the private sector where the National Labor
 Relations Board has consistently held that unilateral changes in the
 time and manner of payment of employees' wages are violative of section
 8(a)(1) and (5) of the National La0or Relations Act, as amended, 29 USC
 158(a)(,) and (5).  See e.g. Superior Rambler, 150 NLRB 1264, 1268
 (1965) (unilateral change in payday from Saturday to Friday);  American
 School Supply Co., 157 NLRB 473, 474 (1966) (unilateral change in payday
 from every other Monday to every other Friday);  and Southern Florida
 Hotel and Motel Assn., 245 NLRB 561, 569 (1970) (unilateral change in
 time and manner of paying tips from payment within 48 hours of a
 function to payment every other week).
 
    Therefore, it is found, that agency management is obligated under the
 Statute to bargain with an exclusive representative of its employees
 concerning a decision to eliminate hand delivery of payroll checks to
 bargaining unit employees at their worksites and also the impact and
 implementation of the decision since it involves a change in pay
 practices which are negotiable conditions of employment.  /8/
 
    With the exception of the scope of the change (i.e., the new pay
 policy involved herein affected only new employees whereas the change in
 McAlester affected all employees) the instant cases do not differ
 markedly from McAlester.  Thus, all of the cases involve the same basic
 change in conditions employment-- the elimination of hand delivery of
 payroll checks and the requirement that employees have their checks
 mailed directly to a non-work address or a financial institution.
 Moreover, the impact of the new pay policy on affected employees at
 Respondent NUSC is essentially the same as that which was found to be
 substantial in McAlester.  That is, the decision to eliminate hand
 delivery of payroll checks at the worksite operates to deprive affected
 employees of the assurance that they will receive their payroll checks,
 on time every other Thursday and 0e able to convert those checks to cash
 that same day during their normal working hours.  In this regard, it is
 undisputed that Respondent NUSC has seldom, if ever, failed to deliver
 payroll checks on the designated payday and that procedures were
 established whereby employees could readily "cash" their checks during
 their normal working hours on payday.  New employees, on the other hand,
 are required to assume the risk that their payroll checks may not arrive
 at their bank or nonwork address until after payday.  /9/
 
    In such circumstances, it is plain that the new pay policy is neither
 insignificant nor trivial.  While Respondent contends that the new pay
 policy did not involve any substantial impact, such contention is
 negated by the testimony, S. R. Fisher, Chief of Labor and Employee
 Management Relations at Respondent NUSC.  In this regard, Mr. Fisher
 candidly testified that Respondent NUSC recognized that the decision to
 require new employees to have their payroll checks mailed directly to a
 nonwork address or financial institution was of such import to affected
 employees that Respondent made regular efforts to inform its new
 employees as to the new means by which their payroll checks would be
 delivered.  Thus, in Respondent's own mind this change in an established
 condition of employment and indeed had a substantial adverse impact on
 affected bargaining unit employees.  Accordingly, it is found and
 concluded that Respondent NUSC was, obligated to provide both Local
 R1-134 and R1-144 with an opportunity to bargain concerning the new pay
 policy and its impact and implementation.
 
    Having found that Respondent Navy did not engage in any unfair labor
 practices in violation of section 7116(a)(1) and (5) of the Statute, it
 is recommended that the Consolidated Complaint insofar or it alleges
 that the Department of the Navy committed any unfair labor practices, be
 dismissed in its entirety.  Having further found that Respondent NUSC
 has engaged in, and is engaging in certain conduct in violation of
 section 7116(a)(1) and (5) of the Statute it is recommended that the
 Authority issue the following:
 
                                   ORDER
 
    Pursuant to Section 18 of the Statute, 5 U.S.C. 7118 and, section
 2423.29 of the Regulations, 5 C.F.R. 2423.29, the Authority hereby
 orders that Department of the Navy, Naval Underwater Systems Center
 (Newport, Rhode Island), shall:
 
    1.  Cease and desist from:
 
          (a) Instituting any change in the established policy and
       practice of the hand delivery of employee paychecks on the
       premises without first notifying the Federal Union of Scientists
       and Engineers, NAGE, Local R1-144 and National Association of
       Government Employees, NAGE, Local R1-134, the exclusive
       representatives of its employees, and affording such
       representatives the opportunity to negotiate in good faith, to the
       extent consonant with law, regulations and the Statute, prior to
       any decision concerning such policy and practice.
 
          (b) In any like or related manner, interfering with,
       restraining, or coercing its employees in the rights assured by
       the Statute.
 
    2.  Take the following affirmative action in order to effectuate the
 purposes and policies of the Statute:
 
          (a) Rescind and withdraw its decision on "New Policy on Pay
       Checks," unlawfully announced by its memorandum of August 4, 1982,
       and implemented on October 1, 1982.
 
          (b) Forthwith reinstate the policy and practice of the hand
       delivery of paychecks on the premises as it existed prior to
       October 1, 1982.
 
          (c) Notify the Federal Union of Scientists and Engineers, NAGE,
       Local R1-144 and National Association of Government Employees,
       NAGE, Local R1-134 of any proposed change regarding the hand
       delivery of paychecks on the premises and, upon request, negotiate
       with such representative, to the extent consonant with law and
       regulations, on any such proposal.
 
          (d) Post at its facility at the Department of the Navy, Naval
       Underwater Systems Center (Newport, Rhode Island) copies of the
       attached notice marked "Appendix", on forms to be furnished by the
       Federal Labor Relations Authority.  Upon receipt of such forms,
       they shall be signed by the Commanding Officer and they shall be
       posted for 60 consecutive days thereafter in conspicuous places,
       including all places where notice to employees are customarily
       posted.  The Commanding Officer shall take reasonable steps to
       insure that such notices are not altered, defaced, or covered by
       any other material.
 
          (e) Notify the Regional Director of the Federal Labor Relations
       Authority for Region I, whose address is:  441 Stuart Street, 9th
       Floor, Boston, Massachusetts 02116, in writing, within 30 days
       from the date of this Order, what steps have been taken to comply
       therewith.
 
    IT IS FURTHER ORDERED that the Consolidated Complaint insofar as it
 alleges a violation of the Statute by the Department of the Navy, be,
 and it hereby is dismissed.
 
                                       ELI NASH, JR.
                                       Administrative Law Judge
 
    Dated:  September 29, 1983
    Washington, DC
 
 
 
                                 APPENDIX
 
                          NOTICE TO ALL EMPLOYEES
 
  PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
 RELATIONS
 AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
 OF TITLE
 5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
 RELATIONS
 STATUTE WE HEREBY NOTIFY OUR EMPLOYEES THAT:
 
    WE WILL NOT institute any change in the established policy and
 practice of the hand delivery of employee paychecks on the premises
 without first notifying the Federal Union of Scientists and Engineers,
 NAGE, Local R1-144 and National Association of Government Employees,
 NAGE, Local R1-134, the exclusive representative of our employees, and
 affording it the opportunity to negotiate in good faith, to the extent
 consonant with law and regulations, prior to any decision concerning
 such policy and practice.
 
    WE WILL NOT in any like or related manner, interfere with, restrain
 or coerce our employees in the exercise of their rights assured by the
 Federal Service Labor-Management Relations Statute.
 
    WE WILL rescind and withdraw the decision on "New Policy on Pay
 Checks," which we unlawfully announced by the memorandum dated August 4,
 1982, and which we implemented on October 1, 1982.
 
    WE WILL forthwith reinstate the policy and practice of the hand
 delivery of payroll checks on the premises as it existed prior to
 October 1, 1982.
                                       (Agency or Activity)
 
    Dated:  By:  (Signature)
 
    This Notice must remain posted for sixty (60) consecutive days from
 the date of posting and must not be altered, defaced, or covered by any
 other material.
 
    If employees have any questions concerning this Notice or compliance
 with any of its provisions, they may communicate directly with the
 Regional Director of the Federal Labor Relations Authority, Region I,
 whose address is:  441 Stuart Street, 9th Floor, Boston, Massachusetts
 02116 and whose telephone number is (617) 223-0920.
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ Section 7106(b)(1) provides in pertinent part:
 
          Sec. 7106.  Management rights
 
                                  * * * *
 
          (b) Nothing in this section shall preclude any agency and any
       labor organization from negotiating--
 
          (1) at the election of the agency. . . . on the technology,
       methods, and means of performing work(.)
 
 
    /2/ In view of the Authority's Decision herein, it is unnecessary to
 address the Respondents' assertion that a compelling need exists under
 section 7117 of the Statute for the agency regulation involved herein.
 
 
    /3/ Section 7106(b)(2) and (3) of the Statute provides:
 
          (b) Nothing in this section shall preclude any agency and any
       labor organization from negotiating--
 
                                  * * * *
 
          (2) procedures which management officials of the agency will
       observe in exercising any authority under this section;  or
 
          (3) appropriate arrangements for employees adversely affected
       by the exercise of any authority under this section by such
       management officials.
 
 
    /4/ Respondent, on May 6, 1983 contends that the General Counsel in
 disregard of section 2423.25 of the rules and regulations failed to
 serve it with a brief in this matter.  The General Counsel responded on
 May 11, 1983.  A review of the service sheet attached to the General
 Counsel's brief shows that while the Department of the Navy was timely
 served, the General Counsel inadvertently failed to address this brief
 specifically to Respondent's Counsel.  Absent any showing of prejudice
 or harm by this inadvertence, Respondent's request that the entire brief
 be given no consideration and returned to the General Counsel, is
 denied.
 
 
    /5/ The General Counsel's unopposed motion to correct the transcript
 is granted.
 
 
    /6/ In view of the above finding, it is unnecessary to address
 numerous other arguments raised on behalf of the Department of the Navy
 urging dismissal of all allegations of the Complaint involving the
 Respondent Navy.  It is also unnecessary to rule on Respondent Navy's
 motion to sever it from this matter.
 
 
    /7/ No exception to bargaining can be granted to Respondent pursuant
 to section 7117(a)(1) because the SECNAV Instruction is an agency-wide
 regulation rather than a Government-wide rule or regulation.
 
 
    /8/ Respondents' assertion that the method of distributing employees'
 payroll checks is expected from an agency's duty to bargain because it
 is " . . . a matter directly related to the work of employees and the
 activity . . . " is wide of the mark.  Assuming that Respondent relies
 on section 7106(a)(1) of the Statute which reserves to agency management
 the right to determine its " . . . mission, budget, organization, number
 of employees, and internal security practices . . . ." As noted above,
 the contention that the decision to eliminate hand delivery of payroll
 checks is directly related to ah agency's budget or internal security
 practices was specifically rejected in McAlester.  Similarly,
 Respondents' apparent contention that "substantive" bargaining over the
 new pay policy would, somehow require it to alter its mission is wholly
 lacking in any factual basis and must also be rejected.  cf.
 Philadelphia Naval Shipyard, 3 FLRA 437 (1980) (proposal that, for
 purposes of applying the overtime provisions of section 7(k) of the Fair
 Labor Standards Act, the "work period" would consist of 7 days does not
 directly interfere with the agency's right, under section 7106(a)(1) of
 the Statute, to determine its organization or number of employees).
 
 
    /9/ At the hearing, Respondents, argued that, considering the new pay
 policy was imposed only on new employees, who never enjoyed hand
 delivery of the payroll checks at the worksite, there is no change in
 any employee's established conditions of employment and, therefore, no
 resultant bargaining obligation.  Respondents' position appears to be
 that agency management is free to unilaterally establish new conditions
 of employment provided that it does so prospectively or in the form of a
 "pre-hiring requirement." This novel approach is without precedent,