18:0666(79)CA - DOD, Navy, Navy Public Works Center, Norfolk, Virginia and Tidewater Virginia FEMT Council -- 1985 FLRAdec CA
[ v18 p666 ]
The decision of the Authority follows:
18 FLRA No. 79 DEPARTMENT OF DEFENSE DEPARTMENT OF THE NAVY NAVY PUBLIC WORKS CENTER NORFOLK, VIRGINIA Respondent and TIDEWATER VIRGINIA FEDERAL EMPLOYEES METAL TRADES COUNCIL, AFL-CIO Charging Party Case No. 4-CA-20279 DECISION AND ORDER The Administrative Law Judge issued the attached Decision in the above-entitled proceeding, finding that Respondent Navy Public Works Center (NPWC) had not engaged in the unfair labor practices alleged in the complaint and recommending dismissal of the complaint with respect to NPWC. The Judge further found that Respondent Department of the Navy had engaged in certain other unfair labor practices alleged in the complaint and recommended that it be ordered to cease and desist therefrom and take certain affirmative action. Thereafter, Respondent Department of the Navy filed exceptions to the Judge's Decision. 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. Contrary to the Judge, the Authority finds that Respondent Department of the Navy did not violate section 7116(a)(1) and (5) of the Statute by preventing Respondent NPWC from bargaining with the Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO, the exclusive representative of unit employees, regarding a unilateral change in the method of distributing unit employees' paychecks and earnings statements. 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), finding 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. Thus, the Authority finds that Respondent Department of the Navy's alleged interference with the bargaining relationship between NPWC and the Union, by preventing bargaining 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, in adopting the Judge's conclusion that the complaint should be dismissed as to Respondent NPWC, i.e., management at the level of exclusive recognition, the Authority notes that, in the absence of an election to do so, there was no duty to bargain over the change in the method of paycheck delivery. /2/ The Authority further adopts the Judge's conclusion that the section 7116(a)(7) allegation must be dismissed. Thus, as found by the Judge, the General Counsel failed to establish that the Navy regulation herein conflicted with any provision of the current collective bargaining agreement between NPWC and the Union. Therefore, the complaint shall be dismissed in its entirety. ORDER IT IS ORDERED that the complaint in Case No. 4-CA-20279 be, and it hereby is, dismissed. Issued, Washington, D.C., June 21, 1985 Henry B. Frazier III, Acting Chairman William J. McGinnis, Jr., Member FEDERAL LABOR RELATIONS AUTHORITY -------------------- ALJ$ DECISION FOLLOWS -------------------- DEPARTMENT OF THE NAVY AND NAVY PUBLIC WORKS CENTER, NORFOLK, VIRGINIA Respondent /3/ and TIDEWATER VIRGINIA FEDERAL EMPLOYEES METAL TRADES COUNCIL, AFL-CIO Charging Party Case No. 4-CA-20279 Walter B. Bagby, Esq. For the Respondents Thomas E. Rinehart For the Charging Party Barbara S. Liggett, Esq., and Pamela B. Jackson, Esq. For the General Counsel Before: SALVATORE J. ARRIGO, Administrative Law Judge DECISION This is a proceeding under the Federal Service Labor-Management Relations Statute, Chapter 71 of Title 5 of the U.S. Code, 5 U.S.C. 7101, et seq. Upon an unfair labor practice charge filed by the Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO (herein referred to as the Union) against the Department of the Navy, Navy Public Works Center, Norfolk, Virginia (herein sometimes jointly referred to as Respondent), the General Counsel of the Authority, by the Regional Director for Region IV, issued a Complaint and Notice of Hearing on October 20, 1982 alleging Respondent violated the Statute when it implemented changes in the manner of distributing paychecks and leave and earnings statements to employees, contending such conduct patently breached the terms of the collective bargaining agreement between the Navy Public Works Center and the Union. A hearing on the Complaint was conducted on March 14, 1983 at which time all parties were represented and afforded full opportunity to adduce evidence, call, examine and cross-examine witnesses and argue orally. /4/ At the hearing the Complaint was amended to allege that implementation of the changes also constituted a unilateral change in terms and conditions of employment. Upon the entire record in this matter, /5/ including the briefs by Respondents, the General Counsel which have been duly considered, my observation of the witnesses and their demeanor and from my evaluation of the evidence, I make the following: Findings of Fact At all times material herein the Union has been the exclusive collective bargaining representative for various career and career conditional employees in the Navy Public Works Center, Norfolk, Virginia (herein referred to as the Public Works Center). The Union and the Public Works Center are parties to a three year collective bargaining agreement executed August 5, 1981. Prior thereto, the Union and the Public Works Center were parties to a collective bargaining agreement effective August 1978 to August 1981. On August 12, 1981 the Comptroller of the Navy (NAVCOMPT) sent a letter to subordinate activities, /6/ including all disbursing offices serving civilian payroll offices, instructing them that a new standard, comprehensive leave and earnings statement (LES) would replace the leave and earnings statement then in use for Navy civilian employees. /7/ Implementation of the new LES was directed to be completed by the end of the first full pay period in calendar year 1982. Prior to the change the LES was attached to the employees paycheck. The new LES would be a separate document enclosed in an envelope which indicated the name of the employee and was designed to be a "self mailer." The revised LES's were to be printed separately from payroll checks and provide the employee with substantially more information regarding leave, earnings and payroll deduction data. On October 6, 1981, the Secretary of the Navy issued SECNAV Instruction 7200.17 to subordinate activities announcing future policy regarding paydays and methods of payment for all civilian employees. /8/ The instruction, widely publicized among Navy employees, indicated that the Secretary of the Navy favored a system of electronic "Direct Deposit" of paychecks to employee accounts in financial institutions. /9/ At that time, one-third of the Navy's employees participated in the direct deposit program and the Instruction set goals for future increased participation citing benefits of this procedure to employees and the Navy, including substantial reduction in check preparation costs. Thus, a 40 percent civilian employee participation goal was set for October 1982, 45 percent for October 1983, 50 percent for October 1985, 55 percent for October 1987 and 75 percent for October 1990. Instruction 7200.17 indicated it was Department of the Navy (DON) policy: "(1) To distribute civilian pay by PDQ/Direct Deposit or mail upon entry of all civilian employees hired within DON. "(2) Where feasible, to discontinue hand delivery of pay and leave and earnings statements for current civilian personnel. Pay will be forwarded to a designated financial institution or mailed to a non-work address. Leave and earnings statements likewise will be mailed to a non-work address. "(3) To enhance and accomplish payroll processing to permit the utilization of the Direct Deposit Program. "(4) To implement a DON standard civilian payroll system, including the capability to implement Direct Deposit." Instruction 7200.17 stated that NAVCOMPT would exercise control and coordination responsibilities to assure that DON goals would be achieved and provide "amplifying policy" in this regard. The Instruction further required that subordinate activities comply with the instruction and with implementing procedures provided by NAVCOMPT and be responsible for, inter alia, the following: "(1) Supporting these DON goals within their activities; "(2) Coordinating efforts with NAVCOMPT in the promotion of PDQ/Direct Deposit; "(3) Supporting central enhancement efforts and accelerate payroll processing, as necessary, so as to permit utilization of the PDQ/Direct Deposit program; "(4) Supporting the establishment of civilian pay distribution policy by PDQ/Direct Deposit or mail upon entry of all civilian employees hired by any DON activity on and after 1 October 1982; "(5) Supporting to the maximum extent possible within current labor agreement and resource constraints, the discontinuance by 1 October 1982, of hand delivery of pay and leave and earnings statements for civilian employees through the use of PDQ/Direct Deposit or mail. Unless activity exception has been granted, discontinue all hand delivery of pay, and leave and earning statements for civilian personnel by 1 October 1985; * * * * "(7) Reporting to NAVCOMPT, as directed, results of efforts and progress to achieve these objectives; "(8) Implementing systems and procedural changes promulgated by NAVCOMPT; and "(9) Ensuring that future labor agreements/renewals do not conflict with the policies reflected herein." Payroll and disbursing services for the Public Works Center provided by the Regional Financial Services Department of the Naval Supply Center (herein referred to as the Supply Center). /10/ The Supply Center provides payroll and disbursing services for some 60 activities involving some 18,000 employees, including the approximately 1600 unit employees at the Public Works Center, on a non-reimbursable basis and considers itself to have a "customer relationship" with such activities. While both the Public Works Center and the Supply Center are activities within the Department of the Navy, they have separate chains of command to the Secretary of the Navy: the Public Work Center reports to SECNAV through the Naval Facilities Energy Command and the Supply Center reports through the Naval Supply Systems Command. Upon receipt of the NAVCOMPT letter and the SECNAV Instruction, supra, Supply Center personnel determined that the procedures involved in producing and distributing the new LES and disbursing payroll checks would result in more time than previously expended to produce the documents. /11/ According to Frankie Brinkley, the Supply Center's Director of Regional Financial Services, previously the LES and paycheck were printed at the same time. When NAVCOMPT ordered the use of the new LES, the processing involved printing the LES and paycheck separately and required six more hours of print time due to the inclusion of additional information which the new LES's would contain. Thus Supply Center concluded that it would not be able to continue to disburse checks by 11:30 a.m. on Thursdays, as had been the longstanding general practice at least at the Public Works Center, and payday would now have to be on Fridays. /12/ The Supply Center negotiated on the matter with the unions representing its employees and notified the Public Works Center and the other activities that it serviced of its agreements and what the future distribution system would be at these activities. The notification, dated November 17, 1981, referred to the August 12, 1981 NAVCOMPT letter, supra, and the October 6, 1981 SECNAV Instruction, supra, and after setting forth the terms of its distribution agreements with the unions at the Supply Center, stated, inter alia: "3. As your payroll and disbursing activity, NSC Norfolk must also require the same pay distribution system for your activity. It is suggested that union officials and employees of your activity be advised of this change as quickly as possible. Within the next several days, you will receive address cards for each employee to be used in updating addresses. It is extremely important that these cards be returned by the date specified in the forwarding letter. Your servicing Civilian Personnel Office must be notified to forward a valid address with the SF-50 for each new employee hired after 10 January 1982. If the PDQ option is selected, a SF-1189 should be forwarded also. Option cards will also be forwarded for employees to exercise their individual option. Since the new LES provides more data than the one currently in use, training will be provided for the personnel clerks in your activity. "4. Individual exceptions for LESs and checks to be mailed to a work address may be made at the Commanding Officer level, but should be granted in a judicious manner. (SECNAV Instruction 7200.17) provides guidelines for granting exceptions. Any questions relating to implementation of this change should be directed to Frankie Brinkley." On December 4, 1981 the Supply Center notified its employees of the new pay and LES arrangements through an agency information publication called the "Supply Chest." The December "Supply Chest" revealed that beginning with the last payday of January 1982 employees then currently on the payroll would be required to select one of the following options for paycheck distribution: 1. Mailing to a non-work address on Wednesday. 2. Pay transferred to a financial institution using the electronic PDQ system on Wednesday. 3. Paychecks distributed on the job after 3:30 p.m. on Friday. This option would not be available to those who begin employment in January 1982 and would cease to be an available method of distribution for any employee after October 1, 1985. Regardless of the option chosen for paycheck distribution, the newly revised LES's would be delivered by mail. /13/ The Union was unaware that the Navy had effectuated a change in its payroll and LES distribution prior to the publication of the December 4 "Supply Chest." /14/ After obtaining a copy of the "Supply Chest" the Union brought the document to the attention of the Public Works Center's Civilian Personnel Department and inquired whether the changes announced in the "Supply Chest" would also be applicable at the Public Works Center. Berton Owens, Labor Relations spokesman for the Public Works Center, ascertained that this was the case and so advised the Union which requested a meeting on the matter. Representatives of the Union and management met to on or about December 8, 1981. /15/ At the meeting Owens "confirmed" that in January 1982 the Supply Center intended to implement the changes as set out in the "Supply Chest" above, and the changes would affect Public Works Center employees. Owens contended that the Public Works Center did not have control over the matter, explaining that the change had been directed by the Supply Center and the Public Works Center Commanding Officer had no authority to order the Supply Center to "cease and desist." Owens suggested that the situation probably presented a "compelling need" question and should be referred to Washington. The Union responded that in such a case it would be "burning up the lines to Washington." Owens informed the Union that he would be happy to talk with the Union as to the impact of the change on employees but he could not negotiate with the Union on the implementation of the change itself. /16/ The Union representatives indicated they were concerned with the adverse impact the mailing of checks and LES's might have on the employees who had not been totally honest with spouses about earnings over a period of time; Friday paydays precluding a long week-end vacation; the possibility of mail thefts; computer breakdowns and delays in PDQ procedures; and how moving the regular Thursday payday to Friday would disrupt family budgeting which was geared to a Thursday payday. Further, the Union, relying on Article 24, Section 9 of the parties' collective bargaining agreement took the position that procedures concerning employees' pay had been previously negotiated and should remain as they were. /17/ Management's response was that the contract language merely meant to reflect management's commitment to distribute payroll checks promptly when received, as had been their practice. /18/ Owens indicated that in light of the Union's objections he would contact the Supply Center to see what accommodations could be made and get back to the Union. Owens thereafter contacted the Supply Center to relay his problems with the Union. Owens also contacted the Southern Field Division of the Navy Civilian Personnel Command to "prevail on them to get a delay in the thing because (he) felt (they) were going to have difficulty in negotiating on the impact, if nothing else." On December 17, 1981 Respondent and the Union met again to discuss the change. Owens, having been in contact with the Supply Center, indicated it was the Supply Center's position that although the Public Works Center was "pushing" the Supply Center to continue the old practice entirely, there was "no room" to talk about the change itself and the LES change would have to be put into effect even if hand delivery of checks continued. The Union asked if there might be someway to continue with the old system mechanically. Owens described the new LES format and explained the difficulty of sending it to the Public Works Center for Thursday hand delivery since machine processing of both checks and LES's was involved. Thus, Owens explained, additional processing would be required if the system as programmed was not followed. Owens further related that it was the Supply Center's position that the LES change appeared inevitable and the then current system of check delivery could only be extended for a limited time since there only existed a 90-day supply of checks in the old format. The Union was unwilling to accept any system other than the current one, relying again on the language of Article 24, Section 9 of the contract. Owens did not change his position, acknowledged that "problems" would exist, but was willing to discuss the impact on employees and suggested that the parties send a joint letter to employees to get their current addresses in the event the January implementation date could not be avoided. The Union's representatives responded that they would check with their Washington office on this and the meeting ended. The parties met again on December 21, 1981. At this meeting the Union rejected the joint letter proposal and wanted a commitment that the Thursday payday and LES delivery would continue. Owens indicated that while he could negotiate on the impact of the change, the Supply Center was not giving him any flexibility to negotiate on the change itself which would go ahead as planned. Owens further related that he received a concession from the Supply Center that paychecks would be available for distribution at noon on Friday rather than 3:30 p.m. as originally planned. However, the Union remained adamant that the checks and LES's continued to be delivered at the worksite on Thursdays. Another meeting was held on January 6, 1982. Owens announced that he had been given additional time to negotiate with the Union on the impact and implementation of the change, and hand delivery of paychecks and LES's to the worksite would continue during that time. However, Owens made it clear that the Public Works Center was not in control of the situation and could not negotiate on the change in the system of pay and LES delivery. Owens also indicated that the Supply Center now determined that the LES's could be assembled for hand delivery at the worksite. The Union again insisted that Article 24, Section 9 of the contract required the continuation of the pay practice as it was and Owens maintained his position that the Union was misinterpreting the contract. According to Owens the employer did not have control over the payday; they were "at the mercy" of the Supply Center; and the contract clause in question merely required that when the Public Works Center got the checks, they would be delivered promptly. The Union requested a meeting with Frankie Brinkley, the Supply Center's Director of the Regional Financial Services Department to pursue retaining the Thursday payday and the meeting adjourned. On January 8, 1982 Owens issued an "All Hands Bulletin" to Public Works Center employees which stated that there would be no change in pay procedures during January 1982. The "All Hands Bulletin" indicated that discussions concerning changes in how and when employees would be paid " . . . started as the result of computer program changes at the Naval Supply Center which prepares our payroll and payrolls for 68 other activities." The announcement set forth the "Current Status" on the matter as follows: "1. Since the Metal Trades Council has requested impact bargaining the change planned by NSC has been postponed and may be modified as it applies to this Center. Bargaining is now going on. "2. Until further notice you will receive your paycheck and leave and earnings statement just as you have in the past. The leave and earnings statement will be in a different format. There may be a few hours delay caused by new paperwork, but we plan to continue Thursday paydays until you are further advised." Director Brinkley, Owens and representatives of the Union met on January 11, 1982. /19/ At this time the Union asked Brinkley if the Thursday payday could be retained. Brinkley stated it could not due to the added computer time and high costs for overtime pay which would be required to maintain a Thursday payday at the Public Works Center. Brinkley responded to other Union questions and described the new standardized, computerized pay procedures in detail and explained the advantages of the system to employees and the government. Brinkley advised that because of the "flimsy" nature of the new LES's, they would be mailed to an employee's home or non-work address even though the employee might opt to receive pay at the worksite. Brinkley indicated that at the almost 60 other activities serviced by the Supply Center employees were given the choice of hand versus direct deposit delivery and very few employees were selecting hand delivery and accordingly, since the Union didn't know how the employees felt, they didn't represent the employees. The Union countered that the employees at the other activities were merely taking the lesser of two evils when making their selection. Brinkley stated that the Supply Center had worked out its problems with its union and she had neither the time nor inclination to deal with unions at some 60 activities on the subject. Brinkley further stated that she was working on a "compelling need" argument for the Navy relative to the matter. On January 28, 1982, Joshua Hardy, Senior Labor Advisor for the Public Works Center and a Assistant Labor Advisor, and Owens met with Union representatives to discuss the change. Hardy advised the Union that the time allotted to the Public Works Center by the Supply Center "to get on with bargaining and reach an accord" was rapidly running out. Hardy indicated that the changes were inevitable and the Union should learn to live with changes. The Union again stated its position that the contract covered pay procedures and suggested that a Thursday payday could be retained by renting Post Office boxes and having managers personally pick up the checks for the Supply Center. The Union indicated a willingness to reopen the contract for negotiations on the matter if negotiations included an unrelated subject regarding the employer's providing tools to employees. The offer was not taken seriously by Hardy and the discussion ended without agreement. Thereafter, Respondent concluded that the parties were at impasse and on February 2, 1982 sent the Union a letter indicating that changes in pay procedures were going forward. The letter, after referring to having previously "provided for a continuation of hand delivery of checks and LES's . . . on a short term basis to accommodate the (Public Works Center's) need for time to engage in bargaining with the Council over a change in a condition of employment," stated, inter alia: "4. Council should be aware that since PWC received its payroll and disbursing services from the NSC on a non-reimbursable basis, PWC is in no position to make a decision as to what day and in what manner our employees are to be paid. That decision is reserved to the head of the activity which provides the service, NSC Norfolk. "5. As of this date, officials at PWC have met with the Council Executive Committee on 6 occasions . . . to bargain on the impact of the pending change in paying civilian employees. The PWC is aware of the MTC position that there should be no change in civilian pay practices until the existing agreement between the parties . . . comes up for renegotiations in 1984, and that separate ULP charges against PWC and the Secretary of the Navy over this matter are currently before Region IV of the Federal Labor Relations Authority. "6. PWC is on notice from NSC that the move from Thursday to Friday delivery of checks for civilian employees is imminent. To facilitate the changeover, notice is hereby given that PWC plans to distribute the employee option forms to employees during the weeks of 22 February 1982. This will afford each employee an opportunity to indicate their preference of the options described in paragraph 2 above by which they will be paid in the future. "7. . . . officials of PWC will remain available to meet with the Council and bargain, upon request, concerning this matter. Since there have been no specific proposals proffered by the Council other than to maintain the status quo, we would particularly welcome suggestions which would lessen any adverse impact of the proposed changes." The parties did not engage in any further bargaining on the matter and sometime during the last week of February 1982 the Public Works Center notified its employees by a bulletin that pay procedures would be revised beginning with the pay period ending April 3, 1982. The bulletin indicated, inter alia, that employees had options identical to those set out in the December 4, 1981 Supply Center "Supply Chest" notification to its employees, supra. However, in a subsequent bulletin dated February 25, 1982 the Public Works Center informed employees pay procedures previously announced would be revised to provide that checks would be distributed at the worksite prior to 3:00 p.m. instead of after 3:30 p.m. on Fridays and upon request, LES's would be delivered to the worksite rather than being mailed to a non-work address. The changes were implemented as scheduled. /20/ Discussion and Conclusions The Alleged Breach of Contract Counsel for the General Counsel alleges that Respondent Public Works Center obligated itself to maintain the procedures concerning the distribution of paychecks and LES's by the terms of Article 24, Section 9 of the collective bargaining agreement and to change those procedures without the express consent of the Union constituted a patent breach of the agreement in violation of section 7116(a)(5) and (1) of the Statute, and, under the circumstances herein, a violation of section 7116(a) (7) as well. /21/ Respondent denies that such an obligation flows from Article 24, Section 9 and contends that the clause only requires it to continue its past practice of promptly distributing paychecks when they were received from the Supply Center. I find that the evidence fails to support the General Counsel's contention in this regard. The wording of the clause itself is open to varying interpretations. However, Respondent's witnesses testified without contradiction that during contract negotiations involving this clause, concern centered on maintaining a Thursday payday. There is no evidence that other matters were under consideration when this clause was discussed. Further, the same testimony reveals that Respondent clearly indicated to the Union that by the execution of this article it was only binding itself to continue doing what it had done in the past: promptly distributing paychecks when it received them from the Supply Center. Accordingly, since I find the underlying meaning of the article is not as urged by the General Counsel, I conclude the General Counsel has not sustained its burden of proof and reject the contention that a patent breach of contract occurred. Therefore, I recommend the allegation that Respondent violated the Statute in this regard be dismissed. Other Contentions Counsel for the General Counsel also contends that Respondent unilaterally changed the practice regarding distribution of payroll checks and leave and earnings statements and thereby failed and refused to bargain in good faith with the Union. Essentially, Counsel for the General Counsel alleges that Respondent refused to bargain with the Union over the substance of the change and, when it effectuated the change in these circumstances, Respondent violated section 7116(a)(1) and (5) of the Statute. More particularly, Counsel for the General Counsel alleges that: (1) Respondent Department of the Navy violated the Statute by directing and requiring the Public Works Center, through the conduct of the Supply Center, DON's agent, to violate its collective bargaining obligation and implement the change and; (2) to the extent that Respondent Public Works Center retained discretion with respect to pay procedure changes, it also committed an unfair labor practice by implementing the changes. In its brief, Respondent contends that the Department of the Navy, (Secretary of the Navy) did not violate the Statute by the issuance of SECNAVINST 7200.17, arguing that: (1) the method of paycheck distribution concerns a method of performing the work of NAVCOMPT and therefore constitutes the exercise of a reserved right protected by section 7106(b)(1) of the Statute; /23/ (2) pursuant to Section 7118 of the Statute the unfair labor practice charge was untimely filed since the SECNAV Instruction issued on October 6, 1981, the Union had prior notice through receipt of a proposed draft of the Instruction sometime before June 22, 1981 and the charge was not filed until May 6, 1982, more than six months later; /23/ (3) the Instruction does not require any conduct which would violate the Statute; (4) requiring newly hired employees to be governed by the new mail distribution policy does not change or alter any established pay distribution policy for any unit employee. Respondent further denies that the Public Works Center violated the Statute contending: (1) the dispute herein involves a question of "compelling need" and accordingly the procedures established in section 7117 of the Statute rather than the unfair labor practice procedures should have been utilized; (2) substance and impact and implementation bargaining on the proposed changes in fact took place and implementation occurred only after impasse; (3) no change occurred which materially and substantially affected bargaining unit employees and therefore, no obligation to bargain existed; (4) the Public Works Center had no choice but to ministerially follow the provisions of SECNAVINST 7200.17 and therefore cannot be held liable for any alleged refusal to bargain; and (5) the Public Works Center had no control over the computerized payroll system at the Supply Center, "a separate and distinct activity," which precipitated the change and therefore cannot be held accountable for the changes. There is no contention that the distribution of paychecks and LES's is not a matter concerning terms and conditions of employment. Indeed, the Public Works Center in its February 2, 1982 letter to the Union, supra, expressly acknowledge the fact. In any event, in agreement with the findings and conclusions of Administrative Law Judge William B. Devaney in United States Department of Defense, Department of the Army, McAlester Army Ammunition Plant, Case No. 6-CA-1041, OALJ-82-77, April 30, 1982, at 22, I find that matters concerning the distribution of paychecks and LES's are conditions of employment within the meaning of the Statute. See also the decisions of Administrative Law Judge Eli Nash, Jr. in Department of the Navy, Office of the Secretary (Washington, D.C.) and Naval Underwater Systems Center (Newport, Rhode Island), Case Nos. 1-CA-30010, 1-CA-30011, OALJ-83-138, September 29, 1983, and Department of the Navy, Washington, D.C., Case No. 9-CA-30108, OALJ-83-140, September 30, 1983. However, Respondent does contend that the manner of paycheck distribution is a reserved right of management within the meaning of section 7106(b)(1) of the Statute. Respondent's theory is that the Secretary of the Navy when acting through the Comptroller of the Navy exercised DON's reserved right in designing and developing financial systems and procedures. Respondent equates such activity to determining the "technology, methods and means of performing work." Thus, according to Respondent, the decision to effectuate the change was not a bargainable matter since Respondent had not elected to bargain on the matter. This contention is without merit. The Authority held in American Federation of State, County and Municiple Employees, AFL-CIO, Local 2477, et a., 7 FLRA 578 at 582, 583 (1982) that "the technology . . . of performing work" as used in the Statute "means the authority of the Agency to determine the technical method in accomplishing or furthering the performance of the Agency's work." In that case the Authority went on to hold that in order to constitute the technology of performing work, the activities in question had to be more than merely incidental to the performance of the Agency's work. Id at 584, 587, 588. In a later case, the Authority found that a union's bargaining proposal did not conflict with management's reserved authority to determine the technology methods, and means in accomplishing or furthering the performance of an agency's work where it was not shown, nor did it otherwise appear, that the matter under consideration was "principally" or "directly" related to the performance of the agency's work. American Federation of Government Employees, AFL-CIO, Local 3525 and United States Department of Justice, Board of Immigration Appeals, 10 FLRA 61 (1982) at 64. See also National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 747 (1980). In the case herein, clearly the manner of distribution of paychecks and leave and earnings statements is not concerned with the technical method in accomplishing or furthering the performance of the Department of the Navy's work nor principally or directly related to the work of the Agency. Accordingly, I conclude that the distribution of paychecks and LES's is not a matter within management's reserved authority within the meaning of "the technology methods, and means of performing work" as set forth in section 7106(b)(1) of the Statute. Cf. Internal Revenue Service, Chicago, Illinois, 9 FLRA No. 73 (1982), rev. on other grounds, 717 F.2d 1174 (7th Cir. 1983). I further reject Respondent's contentions that the unfair labor practice charge as applicable to the Department of the Navy was untimely filed. It is true the Instruction 7200.17 (October 6, 1981) issued more than six months prior to the filing of the charge on May 6, 1982, as was the NAVCOMPT letter (August 12, 1981). However, Counsel for the General Counsel contends it was not the promulgation, but the enforcement or implementation of the SECNAV Instruction (and I assume the NAVCOMPT letter), through the actions of the Public Works Center and the Supply Center, which violated the Statute. Accordingly, there being no action of the Department of the Navy alleged to violate the Statute which lies more than six months before the filing of the charge on May 6, 1982, Respondent's position is not well taken. Further, since the General Counsel's theory of violation with regard to the Department of the Navy is based upon the actions of the Supply Center as an agent of the Department and not any independent action of the Department, I find the question of whether SECNAV Instruction 7200.17 required any subordinate body to take any action which would violate the Statute to be immaterial to a resolution of the issues presented herein. It is the conduct of the agent and not the principal that is the focal point herein. Cf. Department of Defense Dependent Schools, 11 FLRA No. 100 (1983). For the same reason I conclude that the question of whether the Department of the Navy Instruction required newly hired employees to be governed by the new distribution policy is similarly immaterial. However, since, according to the General Counsel's theory, if the Department's alleged agent was in any way responsible for the change and the Department is responsible for the acts of its agent, then the question of whether such requirement changed or altered an established pay distribution policy must be resolved. Respondent's argument in this regard appears to be that employees hired after the new distribution policy was effectuated did not have their individual pay practice changed since they never had a different pay practice. Carrying this argument to its logical conclusion, any existing condition of employment (and contract provision?) will not be applicable to new unit employees and an employer could set their conditions of employment upon hiring as management saw fit. I find Respondent's contention to be without merit. Apparently the same argument was made to Administrative Law Judge Eli Nash, Jr. in Department of the Navy, Office of the Secretary (Washington, D.C.) and Naval Underwater Systems Center (Newport, Rhode Island), supra. In that case, (footnote 6, at 14), Judge Nash, in rejecting respondent's position, found the argument to be novel and without precedent and " . . . fundamentally at odds with the Statute's sentiments and conclusions in this regard. Respondent also contends that, in any event, the change herein did not "materially and substantially" affect bargaining unit employees. I reject this contention. In my view when and where an employee receives a paycheck is a matter which can have a significant impact on an employee. Thus, household budgets and payment schedules are frequently governed by when income is received. All employees doubtless do not have bank accounts to receive PDQ payments and would be required to open an account in order to have cash made immediately available on a given payday and incur the attendant costs of maintaining such an account. A desirable bank might be far removed from an employee. The time and date of receipt of a paycheck can substantially affect when and where that check can be converted into needed cash, and home mail delivery may pose a security problem for an employee. /24/ With regard to receipt of LES's, the information contained on the document, e.g., amount of salary, tax, deductions, contributions and leave available, is personal to that employee and the employee has a substantial interest in where the LES is delivered in order to control who has the document available for viewing. Thus, the lack of security of home mail delivery may present a problem and domestic arrangements and conditions might cause an employee to prefer that such documents not be delivered to the home, e.g. marital difficulties, inquisitive family members or others residing with the employee who have no right to have such information and destructive and mischievous children. The Obligation to Negotiate Turning now to the other issues involved herein, I conclude that since the manner of distributing paychecks and LES's is a term and condition of employment, and not a matter within Respondent's reserved authority as Respondent contends, Respondent Public Works Center was obligated to negotiate with the Union on the decision to change the manner of distribution as well as the impact and implementation of the change. /25/ Clearly there was a failure and refusal to bargain with the Union on the decision to change, i.e. whether there would be a change in the practice of (1) distributing paychecks and LES's at the worksite to all of those employees who so desired and, (2) having the checks and LES's delivered on Thursdays. Thus, throughout discussions the Public Works Center's negotiator, Owens, insisted that he could not negotiate the change in manner and date of distribution, but was willing to negotiate on the impact and implementation. Further, Owens repeatedly indicated that the Public Works Center's authority to negotiate was limited in this situation and the Supply Center was really the party which controlled what could be negotiated. On January 11, 1982 the Supply Center, convinced that SECNAV 7200.17 and NAVCOMPT logistically and physically required moving the payday and mailing paychecks and LES's, indicated to the Union it was not willing to negotiate on the matter. Supply Center Financial Services Director Brinkley reenforced this position by flatly stating she had neither time nor the inclination to deal with unions at some 60 activities on the subject. In view of the facts herein, I conclude no good faith bargaining as to the decision on distribution occurred nor was it invisioned that bargaining on the decision would take place in the future. I conclude however that although the exclusive representative, the Public Works Center was not authorized or empowered to negotiate with the Union on the decision to change paycheck and LES distribution, the Public Works Center was authorized to and indeed did negotiate in good faith with the Union on the impact and implementation of the decision. However, the organization of the Department of the Navy is such that the decision herein involved was a matter which the Supply Center had control and not the activity where recognition resided. The Public Works Center merely acted as a conduit to relay the Supply Center's decisions in this matter. Thus I conclude that the Public Works Center negotiated in good faith to the extent of its authority and the actual refusal to negotiate on the decision was the act of the Supply Center. Accordingly, since it is the policy of the Authority to dismiss complaints against respondent activities in such circumstances, I am constrained to recommend that the complaint be dismissed against Respondent Public Works Center. Department of the Interior, Water and Power Resources Service, Grand Coulee Project, Grand Coulee, Washington, 9 FLRA No. 46 (1982) and Department of Health and Human Services, Social Security Administration, Region VI, and Department of Health and Human Services, Social Security Administration, Galveston, Texas District, 10 FLRA No. 9 (1982). The Department of the Navy is a complex, integrated operation. The authority and responsibilities of subordinate organizations within the Department is dictated by the Department, at least with regard to the activities concerned herein. It is the Department that sets policy and decided how payroll functions will be administered. It was pursuant to that policy that the Supply Center was obligated and authorized to act in this matter and it concluded that bargaining on the decision involved herein was either nor required or desirable. The Supply Center acted as agent for the Department and accordingly, I conclude that Department of the Navy, being responsible for the act of its agent, is ultimately responsible for the failure and refusal to negotiate found herein. Cf. Internal Revenue Service, Washington, D.C. and Internal Revenue Service, Hartford District Office, 4 FLRA 237 (1980). See also Department of Health and Human Services, Social Security Administration, Region VI, and Department of Health and Human Services, Social Security Administration, Galveston, Texas District, 10 FLRA No. 9 (1982) at 28 where the Authority held: " . . . under the Statute, when the obligation to negotiate is breached by the acts and conduct of agency management, such a breach may provide the basis for a section 7116(a)(1) and (5) violation regardless of the location of that agency management in the agency chain of command." Compelling Need Finally, I reject Respondent's contention that this matter should have been resolved under the "compelling need" procedures set forth in Section 7117 of the Statute and not the unfair labor practice procedures. In Defense Logistics Agency (Cameron Station, Virginia), et al., 12 FLRA No. 86 (1983), the Authority held: " . . . in exercising its statutory authority to resolve disputes involving alleged unilateral changes in conditions of employment where issues of negotia0ility are also raised, the Authority has promulgated procedures which recognize a labor organization's right to seek a resolution of the negotiability issues 0y filing an unfair labor practice charge and a negotiability appeal and which require the labor organization to select the forum in which to proceed first. (See sections 2423.5 and 2424.5 of the Authority's Rules and Regulations.) Accordingly . . . where a labor organization selects the unfair labor practice forum with regard to alleged unilateral changes in conditions of employment affecting unit employees resulting from the issuance of a new regulation or, as here, modification of an existing regulation, and agency management raises as an affirmative defense that it refused to bargain on the basis that there is a compelling need for the regulation in question, the compelling need must perforce be decided in the unfair labor practice proceeding. (Footnote omitted). Of course, an agency which raises compelling need as an affirmative defense in an unfair labor practice proceeding is required, as it would be in a negotiability proceeding, to come forward with affirmative support for that assertion." (Footnote omitted). In the case herein, the dispute involved as alleged unilateral change and the Union selected the unfair labor practice forum on which to proceed. Accordingly, to whatever extent Respondent has raised a compelling need for the regulations which set into motion the actions concerned herein, this unfair labor practice proceeding is the proper vehicle to resolve that question. Further, in order to prevail in this proceeding Respondent had the obligation to affirmatively support that assertion. Section 2424.11 of the Authority's Rules and Regulations sets forth various "illustrative criteria" for determining a compelling need for an agency's rules and regulations. Section 2424.11 provides: "A compelling need exists for an agency rule or regulations concerning any condition of employment when the agency demonstrates that the rule or regulation meet one or more of the following illustrative criteria: "(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 and regulation implements a mandate to the agency or primary national subdivision under law or other outside authority, which implementation is essentially nondiscretionary in nature." I find little, if any, record evidence to indicate the existence of a compelling need within the meaning of the Statute and the Rules and Regulations for the Respondent's regulations at issue herein. Therefore, I conclude that Respondent has failed to affirmatively support its assertion that a compelling need exists for the regulations involved herein so as to excuse it from its bargaining obligation. Cf. National Federation of Federal Employees, Local 1332 and Headquarters, U.S. Army Material Development and Readiness Command, Alexandria, Virginia, 6 FLRA 361 (1981); American Federation of Government Employees, AFL-CIO, Local 3804 and Federal Deposit Insurance Corporation, Chicago Region, Illinois, 7 FLRA 217 (1981); and American Federation of Government Employees, AFL-CIO, Local 2670, et al., 10 FLRA No. 19 (1982). Accordingly, in view of the entire foregoing /26/ I conclude that the Department of the Navy, by the conduct described herein, violated section 7116(a)(1) and (5) of the Statute and recommend the Authority issue the following: ORDER Pursuant to section 2423.29 of the Federal Labor Relations Authority's Rules and Regulations and section 7118 of the Statute, it is hereby ordered that the Department of the Navy shall: 1. Cease and desist from: (a) Unilaterally changing established conditions of employment at the Navy Public Works Center, Norfolk, Virginia concerning the manner of distri0uting paychecks and leave and earnings statements of employees represented by the Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO, the employees' exclusive collective bargaining representative. (b) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of their rights assured by the Federal Service Labor-Management Relations Statute. 2. Take the following affirmative action: (a) Withdraw and rescind the change concerning the manner of distributing paychecks and leave and earnings statements of employees represented by the Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO, the employees' exclusive collective bargaining representative, which became effective with the pay period ending April 3, 1982 and reinstate the procedures and policies in effect prior thereto. (b) Notify the Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO, the exclusive representative of the employees in the Navy Public Works Center, Norfolk, Virginia, of any intended change in the manner of distributing bargaining unit employees' paychecks and leave and earnings statements and provide such exclusive representative an opportunity to request negotiations with the Navy Public Works Center, Norfolk, Virginia, or other appropriate management representatives, and bargain in good faith on any such proposed change in established conditions of employment. (c) Post at its Navy Public Works Center, Norfolk, Virginia and Naval Supply Center, Norfolk, Virginia, copies of the attached Notice (Appendix A) on forms to be furnished by the Federal Labor Relations Authority. Upon receipt of such forms, they shall be signed by the Secretary, Department of the Navy, and shall be posted and maintained by him for sixty consecutive days thereafter, in conspicuous places, including bulletin boards and all other places where notices to employees in the Navy Public Works Center, Norfolk, Virginia and Naval Supply Center, Norfolk, Virginia are customarily posted. The Secretary, Department of the Navy shall take reasonable steps to insure that such notices are not altered, defaced, or covered by other material. (d) Pursuant to section 2423.30 of the Authority's Rules and Regulations, notify the Regional Director of Region IV, Federal Labor Relations Authority, in writing, within 30 days from the date of this Order as to what steps have been taken to comply herewith. IT IS HEREBY FURTHER ORDERED that the Complaint in Case No. 4-CA-20279, insofar as it alleges a violation of section 7116(a)(7) and violation of the Statute by Respondent Navy Public Works Center, Norfolk, Virginia be, and it hereby is, dismissed. SALVATORE J. ARRIGO Administrative Law Judge Dated: January 16, 1984 Washington, D.C. APPENDIX A 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 WE HEREBY NOTIFY OUR EMPLOYEES THAT: WE WILL NOT change established conditions of employment at the Navy Public Works Center, Norfolk, Virginia concerning the manner of distributing paychecks and leave and earnings statements of employees represented by the Tidewater Virginia Metal Trades Council, AFL-CIO, the employees' exclusive collective bargaining representative, without notifying the exclusive representative and providing it with an opportunity to request negotiations with the Public Works Center or other appropriate management representatives, concerning the proposed change. 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 Statute. WE WILL withdraw and rescind the change concerning the manner of distributing paychecks and leave and earnings statements of employees represented by the Tidewater Virginia Metal Trades Council, AFL-CIO, the employees' exclusive collective bargaining representative, which became effective with the pay period ending April 3, 1982 and will reinstate the procedures and policies in effect prior thereto. (Activity or Agency) Dated: By: (Signature) This Notice must remain posted for 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 its provisions, they may communicate directly with the Regional Director, Region IV, Federal Labor Relations Authority, whose address is: 1776 Peachtree Street, NW., Suite 501, North Wing, Atlanta, Georgia 30309, and whose telephone number is: (404) 881-2324. --------------- 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 Respondent's assertion that a compelling need exists under section 7117 of the Statute for the agency regulation involved herein. /3/ The General Counsel contends that the Department of the Navy and the Navy Public Works Center each violated the Statute by conduct hereinafter described. Accordingly, I have amended the caption herein to more accurately reflect that there are two Respondents in this case. Further, although named in the Complaint, at the hearing Counsel for the General Counsel withdrew the Department of Defense as a Respondent. /4/ Pursuant to Counsel for the General Counsel's unopposed motion to correct the transcript of that proceeding and upon my own recollection, the transcript is hereby amended as noted in Appendix B. /5/ For reasons explicated hereinafter, the motion at the hearing to dismiss the Department of the Navy as a Respondent is hereby denied. /6/ There is no evidence that the Union received a copy of this letter. /7/ Such an instruction by the Comptroller of the Navy has the same force and effect as a directive from the Secretary of the Navy. /8/ Some aspects of this instruction governed military pay practices and accordingly, are not relevant to matters at issue herein. /9/ A precursor to this system was termed "PDQ" (Pay Deposited Quicker) which relied on the transfer of funds primarily by mail. /10/ Pursuant to a decision of the Comptroller of the Navy, binding upon the Public Works Center and the Supply Center, payroll services have been supplied since 1967 and disbursing activities have been provided since April 1981. /11/ The Supply Center is required to implement the changes as drafted by the Comptroller of the Navy. /12/ On only six or seven occasions over the prior two year period had paychecks been distributed to employees other than on a Thursday. /13/ The "Supply Chest" also announced the change in LES's and explained the new format of the LES's. /14/ The Union has National Consultation Rights within the Department of the Navy and pursuant thereto was provided with a draft of Instruction 7200.17. On June 22, 1981, Tommy Maynard, Chairman of the Metal Trades Council at the Public Works Center signed a response to the draft, authorized by the President of the Metal Trades Council, wherein the Union opposed the changes proposed in the draft. However, the record does not disclose whether the draft was identical to the Instruction as ultimately published. /15/ The factual finding of what transpired at this and subsequent meetings is a composite of the credited testimony of the various individuals who attended the meetings and testified at the hearing on the subject. /16/ It is clear from the testimony of witnesses who testified on this matter that "implementation" as used in discussions herein frequently was meant to mean bargaining on the substance of the change, i.e., the decision itself. /17/ Article 24, Section 9 of the agreement provides: "The EMPLOYER will promptly distribute payroll checks upon receipt in accordance with past practices." /18/ Owens and Joshua Hardy, Public Works Center Senior Labor Advisor, testified that they were directly involved in negotiations concerning Article 24, Section 9. According to both Owens and Hardy, this same language was found in the parties' prior agreement and was meant merely to indicate that when the Public Works Center received paychecks from the Supply Center, they would distribute them to employees without delay as they had done in the past. Indeed, during negotiations which gave rise to the 1981 contract the Union sought to commit Respondent to a more specific clause dealing with the day checks would be distributed and Respondent declined to guarantee a Thursday payday or obligate itself any further than the language set out above. /19/ Brinkley testified that she was at the meeting ". . . to lend assistance to Public Works Center management in negotiating this change with their union officials (and) to explain the change (and) the impact that it had over the Naval Supply Center." /20/ Employees who have so opted receive their paychecks at the worksite around 11:30 a.m. on Fridays. The option to receive paychecks and LES's at the worksite was not available to those employees hired after implementation. /21/ The relevant portions of section 7116 of the Statute provide: "(a) For the purpose of this chapter, it shall be an unfair labor practice for an agency-- "(1) to interfere with, restrain, or coerce any employee in the exercise by the employee of any right under this chapter; * * * * (5) to refuse to consult or negotiate in good faith with a labor organization as required by this chapter; * * * * "(7) to enforce any rule or regulation (other than a rule or regulation implementing section 2302 of this title) which is in conflict with any applicable collective bargaining agreement if the agreement was in effect before the date the rule or regulation was prescribed . . . " /22/ Section 7106(b)(1) of the Statute provides: "(b) Nothing in this section shall preclude any agency and any labor organization from negotiating-- "(1) at the election of the agency, on the numbers, types, and grades of employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work . . . ." /23/ Section 7118(a)(4) of the Statute provides, in relevant part: "(4)(A) . . . no complaint shall be issued based on any alleged unfair labor practice which occurred more than 6 months before the filing of the charge with the Authority. /24/ See also the Union's December 8, 1981 expressions of concern to management on this matter, supra.