United States of America


In the Matter of







Case No. 93 FSIP 56


The Department of Veterans Affairs, Washington, D.C. (Employer or VA) filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under the Federal Service Labor-Relations Statute (Statute), 5 U.S.C. § 7119, between it and the VA National Council, American Federation of Government Employees, AFL-CIO (Union).

After investigation of the request for assistance, the Panel determined that the dispute, which concerns mandatory participation in the Employer's Direct Deposit/Electronic Funds Transfer (DD/EFT) program for employees' pay, should be resolved through an informal conference with a Panel representative. The parties were advised that if no settlement were reached, the Panel's representative would notify the Panel of the status of the dispute, including the final offers of the parties, and would make recommendations for resolving the impasse. After considering this information, the Panel would take whatever action it deemed appropriate to resolve the impasse, including the issuance of a binding decision.

The parties met with Senior Legal Advisor Jesse Etelson on February 24, 1993, in Washington, D.C. During the informal conference, the parties were unable to resolve the issues in dispute. Mr. Etelson has reported to the Panel based on the record developed by the parties, and it has considered the entire record in the case.


The Employer provides medical care and benefits to eligible veterans and their beneficiaries. It maintains over 200 facilities throughout the United States. The Union represents a consolidated unit of approximately 100,000 nonprofessional full-time, part-time, and temporary employees working at these facilities. The Employer has provided DD/EFT on a voluntary basis for a number of years. Employees who do not participate in the program voluntarily receive paychecks either by mail to their homes or workplaces, or through bulk mail to the workplace. The Employer has now proposed that participation be mandatory, with a limited exemption for hardship.


The parties disagree over: (1) the criterion for exemption from mandatory participation in the DD/EFT program and (2) the option of paying a service charge to receive paychecks.

1. Criterion for Exemption from Mandatory Participation

a. The Union's Position

The Union proposes that current employees be granted exemptions or waivers from participation in DD/EFT when participation would cause inconvenience. Some employees are viscerally opposed to mandatory DD/EFT for a variety of reasons. For example, privacy interests may be compromised if employees are forced to maintain bank accounts, given the degree of confidentiality that existing laws and practices afford concerning them. There is also a feeling of insecurity in the protection of deposits from financial institution failures. On the question of relative costs, the Employer wishes to relieve itself of the burden of delivering checks by burdening employees with having to maintain bank accounts, with the attendant costs in money and inconvenience. Many employees are now able to conduct their financial affairs with minimal expense by free check-cashing of Government checks at convenient locations, such as grocery stores, and payment of bills at other convenient establishments, making maintenance of a checking account unnecessary.

b. The Employer's Position

Under the Employer's final proposal, current employees would be required to participate in the DD/EFT program, but would be granted exemptions or waivers for hardship. "Hardship" would include any situation where use of DD/EFT would result in greater financial cost to the employee than he or she would incur to conduct financial transactions if the employee did not participate in the DD/EFT program (for example, costs for check cashing or purchasing money orders to pay bills). Cost comparisons would be made with any financial institution that is "accessible" to the employee. The Employer's Fiscal/Finance Officers would assist employees by negotiating with local financial institutions to allow them to have their salary payments electronically transferred.

DD/EFT is financially advantageous to the VA and almost all employees. Approximately 75 percent of the bargaining unit now participates voluntarily. Because of the differences in cost to deliver a paycheck to each of the 30,000 to 35,000 bargaining-unit employees not participating at present, and the lesser cost ($.36 versus $.06) of a DD/EFT transfer, the VA would save approximately $250,000 a year if all these employees participated. DD/EFT is also more accurate. Its use substantially reduces the incidents of failure of employees to receive their checks, in the correct amount, and in a timely manner. Lost and undelivered checks are a real problem in some locations. Moreover, when problems of failure to receive payment arise, failures in the DD/EFT system can be resolved in hours, and normally within 1 day, while replacing lost checks takes several days.

The Panel has already recognized the wisdom of mandatory participation, with a provision for exemption or waiver, in Department of the Air Force, Griffiss Air Force Base, Griffiss Air Force Base, New York, 89 FSIP 206 (December 29, 1989), Panel Release No. 289 (Griffiss). In that case, the Panel departed from a position it took in some earlier cases in which it adopted proposals permitting more than one method of delivery. The Panel was persuaded that "the technology for [DD/EFT] transactions has become more reliable, and should provide a more efficient and economical system for pay delivery . . .," and took administrative notice of "an increasing trend toward paperless paydays." The agency's proposal in Griffiss, which the Panel adopted, provided for a waiver for employees who could demonstrate "that participation is not in their financial interest or would result in personal hardship." The Employer's proposal in the instant case reflects the same considerations.

The Employer should not be required, however, to maintain the status quo until it negotiates with area banking institutions certain conditions for the benefit of employee-depositors, such as waiver of certain service charges, as was the agency in Griffiss. In this regard, Griffiss involved a local dispute affecting a single facility. The instant dispute is national in scope and involves over 200 facilities. A prerequisite similar to that imposed in Griffiss would require the Employer to negotiate with nearly every financial institution in the U.S. The Employer's proposal accomplishes the same purpose as the Griffiss requirement. It would give the Employer a powerful incentive to negotiate favorable terms for employees with financial institutions accessible to employees at each of its facilities, since the absence of such favorable terms would give employees grounds to request waivers because of the costs of establishing and maintaining accounts, and of obtaining funds under various circumstances. This part of the Employer's last proposal also meets the Union's objection that requiring employees to maintain a bank account may make it more expensive for them to receive their pay via DD/EFT than to cash their paychecks and pay bills without the necessity of maintaining an account. Finally, with respect to "accessibility", most of the Employer's facilities have credit unions on site.


Having considered the arguments on this issue, we conclude that the parties should adopt the Employer's proposal, but with the modification that "reasonably accessible" be substituted for "accessible." "Reasonable accessibility" is to be determined according to factors such as the distance and traveling time to a financial institution from the employee's workplace or home, its business hours, and the employee's ability to conduct normal and routine business there without having to take leave. We believe that the Employer's arguments on this issue are essentially sound, and address the most significant concerns advanced by the Union. We find, however, that the concept of "accessibility" is too vague without at least some guidelines for its application.

2. Option of Paying Service Charge to Receive Paychecks

a. The Union's Position

The Union proposes that those employees who choose not to participate in DD/EFT may have the difference in cost between electronic and the mailing expense automatically deducted from their paychecks each pay period. Some employees would be willing, if necessary, to retain the convenience and other perceived benefits of receiving a paycheck, to reimburse the Government for that service. If they prefer to do so, the Employer could realize the same savings it seeks through mandatory participation and, at the same time, accommodate the interests of these employees.

b. The Employer's Position

The Union's proposal is nonnegotiable and the Panel should not consider it. Congress codified in what is now 31 U.S.C. § 9701 an agency's authority to establish a charge or fee for services provided. That section does not provide for a charge of the kind proposed here. Absent other authorization to establish such a charge, arguably the Employer may not do so. Moreover, it is offensive to charge employees to receive their paychecks.


We have uncovered no impediment to the voluntary payments by employees contemplated under the Union's proposal.(1) In our view, requiring current employees to participate in the DD/EFT program is in the public interest because of the considerable savings it would generate. By the same token, we find that the adoption of the Union's proposal constitutes a reasonable accommodation for those relatively few non-participants who continue to value the current means of receiving their paychecks. It should not affect in any way the aforementioned savings to the Employer, and appears to be only minimally administratively burdensome. We shall rephrase the Union's proposal, however, to further reduce any administrative costs that may be created by its implementation. Under this modification, employees may choose not to participate in DD/EFT if they make mutually agreeable arrangements to reimburse the Employer for any additional cost to the Government of providing and delivering a paycheck.