38:1016(85)NG - - AFGE Local 1698 and Navy, Naval Aviation Supply Office, Philadelphia, PA - - 1990 FLRAdec NG - - v38 p1016



[ v38 p1016 ]
38:1016(85)NG
The decision of the Authority follows:


38 FLRA No. 85

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

LOCAL 1698

(Union)

and

U.S. DEPARTMENT OF THE NAVY

NAVAL AVIATION SUPPLY OFFICE

PHILADELPHIA, PENNSYLVANIA (1)

(Agency)

0-NG-1583

DECISION AND ORDER ON NEGOTIABILITY ISSUE

December 18, 1990

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). The appeal concerns the negotiability of one proposal. The proposal seeks to maintain the time between the end of a pay period and the day on which employees receive their paychecks ("pay lag"), at 6 days, rather than the 12 days which the Agency proposes to adopt. For the following reasons, we find that the proposal is negotiable under the Statute.

II. Background

In April 1988, the Agency was notified by the Naval Publications and Forms Center (NFPC) that the NFPC was going to adopt a 12-day "pay lag" for civilian employees at 25 Department of the Navy activities in the Northeast United States, including employees at the Agency. Pay lag is the term used by the parties to indicate the number of days which elapse between the end of a pay period and the day on which employees receive their pay checks for work performed during the pay period. The then-current pay lag at NASO was 6 days. In response, the Union, which represents a bargaining unit at the Agency, submitted the proposal to maintain the 6-day pay lag.

III. Proposal

The Union proposes to retain the current payday without delaying the dissemination of paychecks.

IV. Positions of the Parties

The Agency contends that the proposed retention of the current 6-day pay lag interferes with management's rights to: (1) determine its internal security practices under section 7106(a)(1) of the Statute; (2) direct employees and assign work under sections 7106(a)(2)(A) and (B) of the Statute; (3) determine the number of employees assigned to any organizational subdivision and the methods and means of performing work under section 7106(b)(1) of the Statute.

Specifically, the Agency notes that in National Association of Government Employees, Local R14-89 and Headquarters, U.S. Army Air Defense Artillery Center and Fort Bliss, Fort Bliss, Texas, 32 FLRA 392 (1988) (Fort Bliss), the Authority found that completion of various audit procedures before paychecks are issued constituted internal security practices within the meaning of section 7106(a)(1) of the Statute. The Agency argues that because various payroll processing requirements imposed over the past several years have made it increasingly difficult for the Agency to accomplish all actions necessary to pay employees in a short period of time, the Agency is "being forced to devote more and more scarce resources to payroll processing . . . ." Statement of Position at 3. For example, the Agency claims that it can complete these necessary audit processes within "the current 6-day pay lag only by either continuing to assign a large amount of overtime work or increasing its staffing." Id. at 4. Thus, the Agency contends that negotiation of a 6-day pay lag conditions the Agency's ability to exercise its right to determine its internal security practices, that is, its ability to complete necessary audit procedures prior to issuing paychecks, either on the prior exercise of its right to assign overtime work under section 7106(a)(2)(A) of the Statute or on the prior exercise of its right to determine the number of employees assigned to the payroll office under section 7106(b)(1) of the Statute.

Moreover, the Agency argues that negotiation over the length of pay lag also directly interferes with its rights to direct employees and to assign work under section 7106(a)(2)(A) and (B) of the Statute. According to the Agency, allowing the Union to negotiate the length of pay lag would prohibit management "from extending the pay lag and from assigning additional or miscellaneous duties even if the pay lag is inadequate for the [A]gency to properly fulfill its payroll processing responsibilities." Id. at 19. The Agency claims that if the pay lag remains at 6 days, only the most critical duties necessary to complete the payroll could be assigned. Consequently, according to the Agency, "[m]ost audit assignments would have to be postponed until after the payroll deadline had been met. Thus, management would be prevented from assigning certain work until after completion of the payroll process." Id.

The Agency also notes that in Fort Bliss the Authority found that the functional grouping of personnel in the payroll office to accomplish the payroll audit processes in a systematic manner prior to issuing paychecks constituted the methods and means of performing work under section 7106(b)(1) of the Statute. According to the Agency, however, because other activities whose payrolls are prepared by the Agency would function with a 12-day pay lag, negotiation of a 6-day pay lag would result in multiple pay days with different pay lags. The Agency claims that in order to accommodate multiple pay days with different pay lags the Agency would be obligated to change the functional grouping of personnel in the finance office. Thus, the Agency concludes that "adoption of the proposal would determine the methods and means of performing work under section 7106(b)(1) of the Statute." Id. at 11.

The Agency additionally contends that the Union's proposal would obligate management to take actions that are inconsistent with portions of Title 6 of the General Accounting Office's Policy and Procedures Manual for Guidance of Federal Agencies (GAO Manual), which the Agency asserts is a Government-wide regulation within the meaning of section 7117 of the Statute. According to the Agency, in order to comply with the Union's proposal to pay employees in 6 days, it would be required to submit time and attendance records before the end of a pay period. The Agency argues, however, that submission of time and attendance records prior to the end of a pay period is inconsistent with section 17.2 of Title 6 of the GAO Manual, which prohibits submission of the time and attendance records prior to the end of a pay period except in circumstances not involved in this case. The Agency also argues that because negotiation of pay lag would "permit various bargaining units at activities serviced by [the Agency] to negotiate different paydays, even though many of them are located at the same activity or geographic area[]" the proposal is inconsistent with section 15, Chapter 3 of Title 6 of the GAO Manual, which requires that pay, leave and allowance processing procedures be uniform within an agency or geographic location. Statement of Position at 13.

The Union did not file a response to the Agency's Statement of Position. However, in its petition for review, the Union contended that the current pay lag should be maintained "in order to preclude the negative impact on employee personal cash flow, loss of interest, disruption of financial planning, personal inconvenience and other hardships resulting from the [Agency's] change in the payday." Petition for Review at 1.

V. Analysis and Conclusions

As stated previously, the proposal in this case concerns pay lag--the amount of time between the end of a pay period and the date employees receive their paychecks. In Fort Bliss, the Authority concluded that pay lag concerns conditions of employment under section 7103(a)(14) of the Statute. Among other things, the Authority stated:

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.

Fort Bliss, 32 FLRA at 396 (quoting Federal Employees Metal Trades Council, AFL-CIO and Department of the Navy, Mare Island Naval Shipyard, Vallejo, California, 25 FLRA 465, 469 (1987)).

Consistent with the Authority's decision in Fort Bliss, we conclude that pay lag affects working conditions of bargaining unit employees and, therefore, is a condition of employment within the meaning of section 7103(a)(14) of the Statute. As such, the proposal is within the Agency's duty to bargain unless, as claimed by the Agency, the proposal is inconsistent with a Government-wide regulation and/or with various cited management rights.

For the reasons that follow, we conclude that the proposal is not inconsistent with the GAO Manual relied on by the Agency or inconsistent with the management rights cited by the Agency.

A. The Proposal is Consistent with the GAO Manual

Assuming, without deciding, that the GAO Manual is a Government-wide regulation within the meaning of section 7117(a)(1) of the Statute, we find that the Agency has not established that the proposal obligates the Agency to take actions that are inconsistent with requirements set out in the GAO Manual.

The GAO Manual is the "official medium through which the Comptroller General promulgates (1) accounting principles, standards, and related requirements, and material for the guidance of Federal agencies in the development of their accounting systems and internal auditing programs; (2) uniform procedures for use by Federal agencies[.]" GAO Manual at i. With regard to the payroll function, Title 6 of the GAO Manual, entitled "Pay, Leave, and Allowances," recommends that "pay dates be not more than 12 days following the close of a pay period . . . ." Title 6 of the GAO Manual at section 7.2.D.3. We note, however, that nothing in the GAO Manual establishes a minimum period after the end of a pay period before employees may be paid.

As indicated above, the Agency has decided to pay employees 12 days after the end of a pay period; the longest period of time recommended in the GAO Manual. The Agency contends first that in order to comply with the Union's proposal to pay employees in 6 days, it would be required to submit time and attendance records before the end of a pay period, thereby violating section 17.2 of Title 6 of the GAO Manual, which prohibits submission of the time and attendance records prior to the end of a pay period except in circumstances not involved in this case. Second, the Agency argues that because negotiation of pay lag would "permit various bargaining units at activities serviced by [the Agency] to negotiate different paydays, even though many of them are located at the same activity or geographic area[]" the proposal is inconsistent with section 15, Chapter 3 of Title 6 of the GAO Manual, which requires that pay, leave and allowance processing procedures be uniform within an agency or geographic location. Statement of Position at 13.

Contrary to the Agency's first contention, we note that Title 6 of the GAO Manual was revised in 1989. See GAO Manual, Title 6--Pay, Leave, and Allowances, Transmittal Sheet No. 6-32, dated June 5, 1989. Section 17.2 of Title 6 of the GAO Manual, claimed by the Agency to prohibit the submission of time and attendance records prior to the end of a pay period, was superseded by section 3.2.D.4. See Appendix II to Title 6 at 9-5. Section 3.2.D.4. provides as follows:

When practical, approval of time and attendance reports must be made at the end of the last day of the pay period or later. When this is not practical because of payroll processing requirements to meet established paydays, time and attendance documents must be prepared and approved as close to the end of the pay period as possible and still allow processing of the payroll by payday.

It is clear that nothing in section 3.2.D.4 precludes the submission of time and attendance records prior to the end of a pay period. In fact, section 3.2.D.4. contemplates that in order to meet established paydays, it may be necessary to submit time and attendance records before the end of a pay period. Thus, even assuming that, as claimed by the Agency, the proposal would result in employees submitting time and attendance records before the end of a pay period in order to allow processing of the payroll within a 6-day pay lag, such practice would not be inconsistent with section 3.2.D.4. of Title 6 of the GAO Manual. Consequently, we find that the Agency has not established that it would be obligated under the proposal to process time and attendance records in a manner inconsistent with requirements set out in the GAO Manual.

We also reject the Agency's additional claim that the negotiation of different pay days for the various bargaining units in activities serviced by the Agency would violate section 15, Chapter 3 of Title 6 of the GAO Manual. As stated above, Title 6 of the GAO Manual was revised in 1989. Section 15, Chapter 3 of Title 6 of the GAO Manual, relied on by the Agency, was superseded by Chapter 2, section 2.2.A.3. Chapter 2 of the GAO Manual provides that agency heads are responsible for developing policies and procedures for implementing a payroll system. See Title 6 of the GAO Manual at 2-1. Among other things, section 2.2. provides:

2.2 REQUIREMENTS

A. Policies and procedures must

. . . .

3. be as uniform as possible throughout the agency[.]

Nothing in section 2.2.A.3., or elsewhere in Chapter 2, precludes an agency from establishing different pay days for different activities at a single geographic location. Rather, Chapter 2 concerns the particular procedures an agency utilizes to calculate and verify employees' pay, leave and allowances and, among other things, requires in section 2.2.A.3. that those procedures "be as uniform as possible throughout the agency[.]" Thus, even assuming that, as claimed by the Agency, the proposal would result in the establishment of multiple pay days at a single geographic location, such result is not prohibited by the GAO Manual. Moreover, nothing in the proposal precludes the Agency from seeking to establish jointly with the representatives of the various bargaining units of employees whose pay is prepared by the Agency, a single pay day applicable to all employees.

Consequently, we find that the Agency has not established that the proposal is inconsistent with the GAO Manual.

B. The Proposal Does Not Directly Interfere with Management Rights Under Sections 7106(a) and (b) of The Statute

As stated earlier in this decision, the Agency contends that the proposal is inconsistent with management rights under sections 7106(a) and (b)(1) of the Statute. Specifically, the Agency argues that the proposal is inconsistent with the Agency's rights to: (1) determine its internal security practices under section 7106(a)(1) of the Statute; (2) direct employees and assign work under sections 7106(a)(2)(A) and (B) of the Statute; and (3) determine the number of employees assigned to any organizational subdivision and the methods and means of performing work under section 7106(b)(1) of the Statute.

In arguing that the proposal is inconsistent with the cited management rights, however, the Agency does not claim that pay lag, in and of itself, is a management right. Rather, the Agency contends that because it must perform various tasks associated with preparing employee paychecks during the pay lag, which tasks involve the exercise of the cited management rights, negotiation on the length of pay lag necessarily affects how the Agency accomplishes those tasks. In other words, a shorter pay lag means that the Agency either would have a shorter period of time to complete the tasks associated with preparing employee paychecks or would have to complete payroll processing tasks at a time other than during the pay lag. Consequently, the Agency claims that because performance of the tasks associated with preparing the payroll involves the exercise of the cited management's rights, the proposal directly affects the manner in which the Agency exercises those management's rights and, therefore, is nonnegotiable.

Section 7106 of the Statute removes from the duty to bargain management functions which Congress deemed essential to the effective conduct of agency business. See, for example, Overseas Education Association, Inc. v. FLRA, 876 F.2d 960, 962 (D.C. Cir. 1989). However, the legislative history of the Statute establishes that the management rights clause was intended to be treated as a narrow exception to the obligation to bargain over conditions of employment with only those proposals which directly and integrally go to the specified management right barred from negotiation. See, for example, 124 Cong. Rec. 29,187 (1978) (Statement of Representative Clay) and 124 Cong. Rec. 29,197-99 (Statement of Representative Ford) reprinted in Committee on Post Office and Civil Service, 96th Cong., 1st Sess., Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978 Comm. Print No. 96-7 at 932-33 and 953-56.

Contrary to the Agency's claims, we conclude that the Agency has not established that the proposal directly interferes with any of the cited management rights. First, the proposal in this case does not directly relate to any of the management rights relied on by the Agency. Rather, by requiring the Agency to provide employees with paychecks within a specified time, the proposal only has indirect effects on management's rights. That is, the proposal establishes only a requirement that the Agency accomplish the payroll function in some unspecified manner that allows the Agency to meet the established payday. The Agency may exercise its management rights in any manner that it chooses that allows it to meet the established payday. In our view, it is significant that the proposal leaves the choices as to how the Agency will accomplish its payroll function vis-a-vis the exercise of its management rights to the Agency's discretion.

In arguing that the proposal is nonnegotiable, the Agency asserts that continued implementation of a 6-day pay lag could affect: (1) the amount of overtime work assigned; (2) the number of employees assigned to the organizational subdivision responsible for performing the payroll function; and/or (3) the process and procedures used to perform the payroll function. Although not the Agency's purpose, this multiplicity of arguments underscores the fact that an assortment of options, or a combination of the various options, are available to the Agency if the 6-day pay lag were to continue.

All that the proposal does is create a situation where, in order to implement a particular condition of employment, the Agency will necessarily have to exercise some management right or rights. However, the proposal does not further limit the Agency's choice of action with respect to the exercise of its management rights. Although some choices may seem more logical than others, they are, nonetheless, subject to the Agency's judgments concerning such considerations as its priorities with respect to getting a job done with scarce resources. What is critical here is that the choices are left to the Agency and not prescribed by the proposal. See, for example, National Federation of Federal Employees, Local 2099 and Department of the Navy, Naval Plant Representative Office, St. Louis, Missouri, 35 FLRA 362, 368 (1990) ("To conclude that a proposal or provision interferes with management's right to assign work simply because it requires an agency to take some action would completely nullify the obligation to bargain because no obligation of any kind could be placed on management through negotiations.").

Moreover, the record in this case does not support the Agency's contentions that negotiation of the proposal inevitably will result in the claimed adverse effects. That is, the Agency contends that it cannot complete all necessary audit processes within a 6-day pay lag unless it assigns a large unspecified amount of overtime or unless it increases its staffing by some unspecified amount. In addition, the Agency claims that a 6-day pay lag results in the assignment of necessary audit functions after the payroll deadline has been met, instead of during the pay lag, thereby violating the Agency's rights to assign work and direct employees.

We note, however, that the record establishes that under a 6-day pay lag all necessary audit functions are scheduled for completion by midday on the fourth day after the end of a pay period. See Attachment to Petition for Review entitled Current Payroll Processing Schedule. Pay checks are mailed and electronic funds transfer (EFT) tapes are delivered by the afternoon on the fourth day after the end of a pay period for a pay day scheduled on the sixth day. Id.

Even under the proposed 12-day pay lag, however, all necessary audits are completed by the end of the sixth day after the end of the pay period. See Attachment to Petition for Review entitled Planned Payroll Processing Schedule. Nevertheless, pay checks are not mailed to employees and EFT tapes are not delivered until the ninth and tenth days after the end of a pay period for a pay day on the twelfth day. Id. Thus, it appears that an absolute minimum of 12 days is not necessary to perform all functions deemed essential to payroll processing. Consequently, it is not clear that negotiation of a pay lag of less than 12 days will result, as claimed by the Agency, in either a large increase in overtime or an increase in staffing or obligate the Agency to modify the grouping of personnel in its payroll office.

Finally, even assuming that a 6-day pay lag will result in an increase in the utilization of "scarce resources," such result does not thereby release the Agency from the obligation to bargain under the Statute. As stated by the court in American Federation of Government Employees v. FLRA, 785 F.2d 333, 338 (D.C. Cir. 1986) (per curiam):

[E]conomic hardship is a fact of life in employment, for the public sector as well as the private. Such monetary considerations often necessitate substantial changes. If an employer was released from its duty to bargain whenever it had suffered economic hardship, the employer's duty to bargain would practically be non-existent in a large proportion of cases. Congress has not established a collective bargaining system in which the duty to bargain exists only at the agency's convenience or desire, or only when the employer is affluent.

Although an agency may not be exempt from the obligation to bargain solely because a union proposal may result in some increase in costs, this is not to say that an agency's interest in achieving economy is not a legitimate consideration. However, the employees' interest in when they receive their paychecks is also a legitimate consideration. These competing interests are not irreconcilable and present the sort of questions that collective bargaining is intended to resolve. See Federal Employees Metal Trades Council v. FLRA, 778 F.2d 1429 (9th Cir. 1985). As the Authority discussed in National Treasury Employees Union, Chapter 83 and Department of the Treasury, Internal Revenue Service, 35 FLRA 398 (1990), a finding of negotiability means only that a proposal is within the duty to bargain, not that a proposal must, or ought to, be implemented. An agency has no obligation to abandon what it conceives to be the best interests of the agency merely because it must negotiate on a proposal. Id. at 414.

VI. Summary

The proposal concerns conditions of employment and does not interfere with a regulation promulgated by GAO or with the Agency's rights to: (1) determine its internal security practices under section 7106(a)(1) of the Statute; (2) direct employees and assign work under sections 7106(a)(2)(A) and (B) of the Statute; or (3) determine the number of employees assigned to any organizational subdivision and the methods and means of performing work under section 7106(b)(1) of the Statute. Consequently, the Union's proposal is within the Agency's duty to bargain under the Statute.

To the extent that the Authority's decision in Fort Bliss is inconsistent with our decision in this case, Fort Bliss will no longer be followed.

VII. Order

The Agency shall upon request, or as otherwise agreed to by the parties, bargain over the Union's proposal.(2)




FOOTNOTES:
(If blank, the decision does not have footnotes.)
 

1.