25:0465(31)NG - FEMTC and Navy, Mare Island Naval Shipyard, Vallejo, CA; AFGE Local 1533 and Navy, Navy Commissary Store Region, OK and Navy Commissary Store, Alameda, CA -- 1987 FLRAdec NG



[ v25 p465 ]
25:0465(31)NG
The decision of the Authority follows:


 25 FLRA No. 31
 
                                            Case No. 0-NG-768
                                                16 FLRA 619
 
 FEDERAL EMPLOYEES METAL
 TRADES COUNCIL, AFL-CIO
 Union
 
 and
 
 DEPARTMENT OF THE NAVY
 MARE ISLAND NAVAL SHIPYARD
 VALLEGO, CALIFORNIA
 Agency
 
                                            Case No. 0-NG-753
                                               16 FLRA 623
 
 AMERICAN FEDERATION OF GOVERNMENT
 EMPLOYEES, LOCAL 1533
 Union
 
 and
 
 DEPARTMENT OF NAVY
 NAVY COMMISSARY STORE REGION,
 OAKLAND, AND NAVY COMMISSARY
 STORE, ALAMEDA, CALIFORNIA
 Agency
 
 
 
                       DECISION AND ORDER ON REMAND
 
                          I.  Statement of Cases
 
                           A.  Prior Proceedings
 
    On November 30, 1984, the Authority issued its Decisions and Orders
 on Negotiability Issues in the above-entitled proceedings.  In 16 FLRA
 619, the Union made the following proposal:
 
          (P)ay distribution for new hires be handled in the same manner
       as for current employees i.e., new hires will have the option of
       selecting direct mail or hand delivery of their pay.
 
    In 16 FLRA 623, the Union made the following proposal:
 
          New bargaining unit employees, will not have to accept direct
       deposit or mail as a condition of employment but will have the
       same options of current bargaining unit employees.
 
    In both cases the Authority concluded that the proposals interfered
 with the Agency's right to determine its methods and means of performing
 work, under section 7106(b)(1) of the Statute and, therefore, were
 outside the duty to bargain.
 
    Subsequently, on December 20, 1985, the U. S. Court of Appeals for
 the Ninth Circuit, in a consolidated decision, reversed the Authority's
 determinations with respect to these proposals, and remanded the cases
 for further proceedings before the Authority if the Agency considered
 that it had other valid reasons for refusing to bargain.  Federal
 Employees Metal Trades Council v. Federal Labor Relations Authority, 778
 F.2d 1429 (9th Cir. 1985).  As for the reasons advanced by the Union and
 the Agency in support of their positions, the court stated that "(a)ll
 these reasons present the sort of questions collective bargaining is
 intended to resolve." Federal Employees Metal Trades Council v. FLRA,
 778 F.2d at 1432.
 
                  B.  The Authority's Prior Determination
 
    We take this opportunity to reconsider the authority's previous
 determination in these cases that the manner in which an agency delivers
 paychecks to its employees is a method and means of performing work
 within the meaning of section 7106(b)(1) of the Statute.  We conclude
 that it is not.  There may be aspects of the function of paying
 employees that would fall within the scope of section 7106(b)(1).
 However, the Agency has not established in these cases the required
 nexus between furthering the Agency's mission and the limited matter of
 how paychecks are delivered to employees.
 
    In light of the decision of the Ninth Circuit, we conclude that
 paycheck delivery does not involve the methods and means of performing
 work within the meaning of section 7106(b)(1) of the Statute.
 Therefore, we overrule the Authority's previous holding that the manner
 of paycheck delivery is negotiable only at the election of the Agency,
 under section 7106(b)(1).  To the extent that previous Authority
 decisions find that the manner of paycheck delivery is a section
 7106(b)(1) matter, they are inconsistent with our decision here and will
 no longer be followed.  /1/ However, we emphasize that in reaching this
 determination, we do not decide broader questions concerning whether and
 to what extent other matters which further an agency's mission fall
 within the scope of section 7106(b)(1).
 
    Pursuant to the Court's direction, we will now consider the parties'
 additional contentions concerning the negotiability of the Unions'
 proposals.
 
                       II.  Positions of the Parties
 
    On Remand, the Agency contends that it is under no obligation to
 bargain over the Unions' proposals for the following reasons:
 
          A.  The proposals are outside the duty to bargain because they
       apply to non-bargaining unit employees, and because they concern a
       matter which is not a substantive condition of employment.
 
          B.  The proposals are contrary to a policy stated in an
       Agency-wide regulation for which a compelling need exists.
 
          C.  The proposals directly interfere with the following
       management rights under the Statute:
 
          1.  The right to determine its budget and its organization,
       under section 7106(a)(1);
 
          2.  The right to assign work and determine the personnel by
       which the Agency's operations will be conducted, under section
       7106(a)(2)(B).
 
          3.  The right to assign employees, under section 7106(a)(2)(A).
 
    The Unions in these cases essentially state that there is no merit in
 any of these additional Agency contentions.
 
                              III.  Analysis
 
            A.  Contentions Concerning Conditions of Employment
 
    In Antilles Consolidated Education Association and Antilles
 Consolidated School System, 22 FLRA No. 23 (1986), the Authority stated
 that in deciding whether a proposal involves a condition of employment
 of bargaining unit employees, two basic factors are considered:
 
          (1) Whether the matter proposed to be bargained pertains to
       bargaining unit employees;  and
 
          (2) The nature and extent of the effect of the matter proposed
       to be bargained on working conditions of those employees.
 
    As to the first factor, the Agency argues that the proposal in Mare
 Island Naval Shipyard applies to non-bargaining unit employees because
 it is prospective in nature.  That is, because it concerns an option to
 be given to future employees, it involves non-bargaining unit employees
 rather than bargaining unit employees.  We are unpersuaded by this
 reasoning.  There is no indication in the record that the Union is
 attempting to negotiate for non-bargaining unit employees, nor do we
 find that the proposal has this effect.  The Agency's contention depends
 upon the fact that the proposal refers to new hires.  In our view, the
 proposal relates solely to individuals designated for employment in
 bargaining unit positions, and has relevance specifically to employment
 in those positions.  The proposal becomes operative only after an
 individual has been employed in a bargaining unit position and thus is
 entitled to receive pay.  See, for example, Overseas Education
 Association, Inc. and Department of Defense, Office of Dependents
 Schools, 22 FLRA No. 34 (1986)(Proposal 1), petition for review filed as
 to other matters sub nom. Overseas Education Association, Inc. v. FLRA,
 No. 86-1491 (D.C. Cir., September 3, 1986);  see also National Treasury
 Employees Union and Internal Revenue Service, 7 FLRA 275
 (1981)(Proposals 2-4).  Consequently, we conclude that the matter
 proposed to be bargained pertains to bargaining unit employees under the
 first factor stated in Antilles Consolidated School System.
 
    Turning to the second factor, the Agency argues that the proposals do
 not concern a substantive condition of employment because they merely
 concern procedures, that is, the manner in which pay will be delivered
 to employees.  It also argues that the proposals do not concern a
 substantive condition of employment because, insofar as the proposals
 pertain to only newly hired employees, the impact of the elimination of
 the hand-delivery option on the bargaining unit is no more than de
 minimis.  See Agency Statement of Position at page 7.
 
    We find that the proposals relate principally to matters affecting
 working conditions of bargaining unit employees.  We find no merit in
 the Agency's argument that because the proposals merely concern
 procedures, that is, the manner in which pay will be delivered to
 employees, they do not directly affect working conditions.  Under
 section 7103(a)(14), a condition of employment is defined as a personnel
 policy, practice or matter affecting working conditions.  In our view,
 the manner of paycheck delivery clearly falls within this definition.
 The receiving of paychecks is the culmination of the employment contract
 between the employee and the employer.  It consummates an agreement to
 exchange compensation for work performed, and therefore, it is
 inextricably bound to a fundamental condition of employment:  pay.
 Without the option of hand-delivery provided by these proposals,
 employees must have their pay mailed to a designated address other than
 the worksite or deposited directly into a bank account.  The elimination
 of this option directly affects such employee concerns as where and how
 quickly pay will be received.  Because there is a direct connection
 between these proposals and the work situation of bargaining unit
 employees, the manner of paycheck delivery is also a condition of
 employment under the second factor stated in Antilles Consolidated
 School System.
 
    In addition, the Agency's claim that these proposals only will have a
 de minimus effect on conditions of employment of bargaining unit
 employees cannot be sustained.  Questions concerning the Agency's duty
 to bargain in the circumstances of this case are not appropriate for
 resolution in a negotiability appeal but should be resolved in an unfair
 labor practice proceeding.  See American Federation of Government
 Employees, AFL-CIO, Local 2736 and Department of the Air Force,
 Headquarters 379th Combat Support Group (SAC), Wurtsmith Air Force Base,
 Michigan, 14 FLRA 302, at 306 n.6 (1984).
 
         B.  Contentions Concerning Compelling Need for an Agency
 
                Regulation
 
    The Agency contends that the Unions' proposals are inconsistent with
 an Agency-wide regulation, SECNAV INSTRUCTION 7200.17, for which there
 is a compelling need.  The Agency asserts that a compelling need exists
 under the criterion set forth at section 2424.11(a) of the Authority's
 Rules and Regulations.  This criterion requires an agency to demonstrate
 that the rule or regulation for which a compelling need is asserted is
 essential, as distinguished from helpful or desirable, to the
 accomplishment of the mission or the execution of functions of the
 agency in a manner which is consistent with the requirements of an
 effective and efficient Government.  American Federation of Government
 Employees, AFL-CIO, Local 1928 and Department of the Navy, Naval Air
 Development Center, Warminster, Pennsylvania, 2 FLRA 451, 454 (1980).
 For the following reasons we conclude that the Agency has failed to
 demonstrate a compelling need for its regulation so as to bar
 negotiation on the Unions' proposals.
 
    The Agency states that this case is analogous in all relevant aspects
 to National Association of Government Employees, Local R14-62 and U.S.
 Army Dugway Proving Ground, Dugway, Utah, 18 FLRA No. 38 (1985),
 remanded sub nom. National Association of Government Employees, Local
 R14-62 v. FLRA, No. 85-2098 (10th Cir., Order November 19, 1986).  In
 that case the Authority found a compelling need under section 2424.11(a)
 for an agency-wide regulation requiring employees to take annual leave
 during periods when agency facilities were partially closed.  The
 Authority determined the agency had demonstrated that its regulation was
 a critical component of the agency's achieving its objective of saving
 money by curtailing operations so as to insure the agency's performance
 of its mission in an effective and efficient manner.  In support of its
 contention that a compelling need exists for the regulation in this
 case, the Agency relies on a study conducted at one Navy payroll office
 which compared the costs of hand delivery of pay checks to 60% of Navy
 civilian employees (who at that time received their checks by hand
 delivery) against the costs of mailing pay checks to those same
 employees.  According to the Agency, this study projected the costs
 Navy-wide for all Navy employees and indicated that mail delivery would
 result in a $4 million saving over hand delivery.
 
    In Lexington-Blue Grass Army Depot, Lexington, Kentucky and American
 Federation of Government Employees, AFL-CIO, Local 894, 24 FLRA No. 6
 (1986), we reconsidered and overruled the Authority's holding in Dugway
 Proving Ground.  There we stated that effectiveness and efficiency are
 not to be measured solely in monetary terms.  While financial
 considerations can be relevant to a determination whether an agency
 regulation satisfies the compelling need criterion set forth in section
 2424.11(a) of the Authority's regulations, a broad balancing of factors
 is appropriate in evaluating such compelling need assertions.  In
 enacting the Statute, Congress found that collective bargaining in the
 Federal sector is in the public interest because, among other things, it
 facilitates and improves employees' performance and the efficient
 accomplishment of the operations of the Government.  See section 7101(a)
 of the Statute.
 
    We agree with the Agency that this case is analogous in all relevant
 aspects to those in Dugway Proving Ground.  Specifically, the Agency in
 this case, like the agency in Dugway Proving Ground, claims that the
 purpose of its regulation is to save money and that negotiation of the
 disputed matters would result in an increase in costs which are
 unavoidable.  For the reasons more fully provided in Lexington-Blue
 Grass Army Depot, therefore, the Agency's contention that there is a
 compelling need for its regulation, under section 2424.11(a) of the
 Authority's regulations, cannot be sustained.
 
    Moreover, we note that the evidence the Agency provides to support
 its claim of monetary savings does not establish this conclusion.  The
 claimed monetary saving is based entirely on the assumption that all 60%
 of Navy employees who, at the time of the study had paychecks hand
 delivered would elect to have their paychecks distributed in a manner
 which entailed the most cost.  The Agency has not established what
 increased costs could be expected as a result of the application of
 these proposals to newly hired bargaining unit employees.  In addition,
 the Agency has made no demonstration that any increased costs, which it
 hypothesizes, are unavoidable and will not be offset in other ways (for
 example, by fewer grievances over paychecks lost in the mail or over
 problems with electronic fund transfers).
 
         C.  Contentions Concerning the Effect of the Proposals on
 
                Management's Rights
 
    We find that the Agency has failed to establish that the Union's
 proposals directly interfere with any of its management's rights under
 the Statute.
 
    1.  Budget and Organization Under Section 7106(a)(1)
 
    In American Federation of Government Employees, AFL-CIO and Air Force
 Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604
 (1980), enforced as to other matters sub nom. Department of Defense v.
 Federal Labor Relations Authority, 659 F. 2d 1140 (D.C. Cir. 1981),
 cert. denied, 455 U.S. 945 (1982), the Authority held that in order to
 demonstrate that a union proposal directly interferes with management's
 right to determine its budget it is necessary for an agency either to
 show that a proposal prescribes programs and operations to be included
 in the agency's budget or the amount to be allocated for them, or to
 make a substantial demonstration that the anticipated increase in costs
 is significant and unavoidable and not offset by compensating benefits.
 In this case it is clear from the record that the proposals do not
 prescribe programs or operations to be included in the Agency's budget
 or the amount to be allocated for them.  That is, the payroll function
 will be maintained by the Agency no matter how paychecks are
 distributed.  Therefore, under the first part of the Wright-Patterson
 test, the proposals do not directly interfere with the Agency's right to
 determine its budget.
 
    As to the second part of that test, the Agency relies upon the same
 evidence it submitted in its original statements of position in the
 cases at issue and as support for its compelling need claim.  As noted
 previously in connection with the Agency's compelling need argument, we
 find that the Agency has failed to adequately support its claim of
 monetary savings.  Further, the Agency has not demonstrated that the
 implementation of the Unions' proposals would result in a significant
 and unavoidable increase in costs which are not outweighed by
 compensating benefits.
 
    The Agency states, in support of its contention that the proposals
 interfere with its right to determine its organization, that they would
 require it to maintain an organizational structure capable of effecting
 hand delivery of paychecks to new employees.  The Authority found in
 American Federation of Government Employees, AFL-CIO, National
 Immigration and Naturalization Service Council and U.S. Department of
 Justice, Immigration and Naturalization Service, 8 FLRA 347, 353 (1982)
 (Proposal 3), reversed as to other matters sub nom. Department of
 Justice v. FLRA, 709 F.2d 724 (D.C. Cir. 1983), that the term
 "organization" generally refers to the administrative and functional
 structure of an enterprise, institution, and the like, including the
 relationships of personnel through lines of authority and responsibility
 with delegated and assigned duties.  The proposals here, like the
 proposal in that case, are not directly concerned with or integrally
 related to any of these matters.
 
    We note in this regard that SECNAV INSTRUCTION 7200.17 authorizes the
 granting of individual exceptions for the mailing of pay and leave and
 earnings statements to an employee's work address.  Thus, the Agency's
 present organizational structure contemplates that hand delivery of
 paychecks to some employees will be provided in accordance with the
 flexible policy in the regulation.  Therefore, the proposals would not
 require the creation of any additional organizational structure.  The
 fact that the Agency's regulation provides for such exceptions also
 shows that the Agency's argument that the proposals preclude it from
 changing its organizational structure is purely speculative.
 Accordingly, the Agency's contention that the proposals interfere with
 its right to determine its organization is without merit.
 
    2.  Right to Assign Work and Determine Personnel
 
    The Agency contends that the proposals would require it to assign
 particular work to certain employees.  It also contends that they would
 require certain Agency employees to perform duties which would not
 otherwise be assigned to them, prohibit the Agency from determining the
 duration of work assignments, and impermissibly limit the Agency's
 discretion regarding to whom the work of delivering pay will be
 assigned.  However, the proposals are not directly or integrally related
 to the assignment of work but instead would allow new bargaining unit
 employees to receive their paychecks at the worksite.  In addition, and
 as previously noted, SECNAV INSTRUCTION 7200. 17 authorizes the granting
 of individual exceptions for the mailing of pay and leave and earning
 statements to an employee's work address.  Thus, the Agency's present
 policy on paycheck delivery contemplates that duties related to the hand
 delivery of paychecks to the worksite will continue to be assigned to
 Agency personnel.  These proposals would not conflict with management's
 right to decide how hand delivery of paychecks will be effectuated and
 by whom.
 
    The Agency's argument that the proposals would prevent it from
 determining the personnel by which its operations are conducted by
 denying the Agency the choice of utilizing personnel outside the Agency
 is also without merit.  Once again, the proposals are not directly or
 integrally related to determinations as to the personnel by which the
 Agency's operations are to be conducted.
 
    3.  Right to Assign Employees
 
    The Agency also contends that the proposals violate its right to
 assign employees under section 7106(a)(2)(A) of the Statute.  The Agency
 does not elaborate further.  The Authority rejects this Agency
 contention for the same reasons that we rejected its contention that the
 proposals interfere with its right to assign work under section
 7106(a)(2)(B).
 
                              IV.  Conclusion
 
    For the reasons and cases cited in the foregoing analysis, we
 conclude that the Unions' proposals are within the duty to bargain.  /2/
 
                                 V.  Order
 
    The Agency must upon request (or as otherwise agreed to by the
 parties) bargain concerning the Unions' Proposals.
 
    Issued, Washington, D.C., February 2, 1987.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member
                                       /s/ Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
                ---------------  FOOTNOTES$ ---------------
 
 
 
    (1) For the cases which relied on the original Mare Island Naval
 Shipyard decision, see the Appendix to this decision.
 
    (2) In finding the Unions' Proposals to be within the duty to bargain
 we make no judgment as to their merits.
 
 
                                 APPENDIX
 
    To the extent that the following decisions find that the manner of
 paycheck delivery is a section 7106(b)(1) matter, they are inconsistent
 with our decision here and they will no longer be followed:
 
    American Federation of Government Employees, AFL-CIO, Local 1409 and
 U.S. Army Adjutant General Publications Center, Baltimore, Maryland, 18
 FLRA No. 68 (1985);  Department of the Navy, Washington, D.C., 18 FLRA
 No. 76 (1985);  Department of Defense, Department of the Navy, Naval
 Public Works Center, Norfolk, Virginia, 18 FLRA No. 79 (1985);
 Department of the Navy, Office of the Secretary, Washington, D.C., and
 Department of the Navy, Naval Underwater Systems Center, Newport, Rhode
 Island, 18 FLRA No. 98 (1985);  Department of Transportation, 19 FLRA
 No. 1 (1985), remanded sub nom. American Federation of Government
 Employees, Local 2747 v. FLRA, No. 85-1561 (D.C. Cir. Order, August 18,
 1986);  Department of the Navy, Washington, D.C., 19 FLRA No. 7 (1985),
 remanded sub nom.  American Federation of Government Employees, Local
 1533 v. FLRA, No. 85-7495 (9th Cir. Order December 3, 1986);  Department
 of Defense, Department of the Navy, Washington, D.C., 20 FLRA No. 13
 (1985);  National Association of Government Employees, Locals R4-1,
 R4-97 and R4-103 and Department of the Navy, Naval Weapons Station,
 Yorkstown, Virginia, 20 FLRA No. 24 (1985);  United States Department of
 Defense, Depa