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 ]
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, and is fundamentally at odds with the Statute's concept of collective bargaining. In this regard, section 7114(a)(1) of the Statute, in pertinent part, provides that an exclusive representative " . . . is entitled to act for, and negotiate collective bargaining agreements covering, all employees in the unit." Respondent's reasoning disparages the federal collective bargaining process. Under its theory agency management could unilaterally exempt all new employees from coverage under a negotiated agreement and by characterizing such exemption as a "pre-hiring requirement" completely dissipate, in time, any support for effective collective bargaining. Such a result surely was not anticipated by the Statute, and, therefore, must be rejected.