18:0802(98)CA - Navy, Office of the Secretary, Washington, DC and Naval Underwater Systems Center, Newport, RI and Federal Union of Scientists and Engineers / NAGE, Local R1-144; Navy, Office of the Secretary, Washington, DC and Naval Underwater Systems Center, Newport, RI and Federal Union of Scientists and Engineers / NAGE, Local R1-134 -- 1985 FLRAdec CA
[ v18 p802 ]
18:0802(98)CA
The decision of the Authority follows:
18 FLRA No. 98
DEPARTMENT OF THE NAVY
OFFICE OF THE SECRETARY
WASHINGTON, D.C. AND
DEPARTMENT OF THE NAVY
NAVAL UNDERWATER SYSTEMS CENTER
NEWPORT, RHODE ISLAND
Respondents
and
FEDERAL UNION OF SCIENTISTS AND
ENGINEERS/NAGE, LOCAL R1-144
Charging Party
Case No. 1-CA-30010
and
DEPARTMENT OF THE NAVY
OFFICE OF THE SECRETARY
WASHINGTON, D.C. AND
DEPARTMENT OF THE NAVY
NAVAL UNDERWATER SYSTEMS CENTER
NEWPORT, RHODE ISLAND
Respondents
and
NATIONAL ASSOCIATION OF GOVERNMENT
EMPLOYEES, LOCAL R1-134
Charging Party
Case No. 1-CA-30011
DECISION AND ORDER
The Administrative Law Judge issued the attached Decision in the
above-entitled proceeding, finding that Respondent Department of the
Navy had not engaged in the unfair labor practices alleged in the
consolidated complaint and recommending that the complaint be dismissed
as to that Respondent. The Judge further found that Respondent Naval
Underwater Systems Center had engaged in the unfair labor practices
alleged in the consolidated complaint and recommended that it be ordered
to cease and desist therefrom and take certain affirmative action.
Thereafter, the Respondents filed exceptions to the Judge's Decision,
and the General Counsel filed an opposition to the Respondent's
exceptions.
Pursuant to section 2423.29 of the Authority's Rules and Regulations
and section 7118 of the Federal Service Labor-Management Relations
Statute (the Statute), the Authority has reviewed the rulings of the
Judge made at the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. Upon consideration of the
Judge's Decision and the entire record, the Authority hereby adopts the
Judge's findings, conclusions and recommendations only to the extent
consistent herewith.
The Judge concluded that Respondent Naval Underwater Systems Center
(NUSC) violated section 7116(a)(1) and (5) of the Statute when it
unilaterally changed the method of delivery of paychecks to new unit
employees from hand delivery to mail delivery without bargaining on the
decision, or the impact and implementation of the decision, with the
Federal Union of Scientists and Engineers/NAGE, Local R1-144 and the
National Association of Government Employees, Local R1-134, the
respective exclusive representatives of NUSC professional employees and
NUSC nonprofessional general schedule employees. Subsequent to the
issuance of the Judge's Decision in this case, the Authority issued its
decision in Federal Employees Metal Trades Council, AFL-CIO and
Department of the Navy, Mare Island Naval Shipyard, Vallejo, California,
16 FLRA No. 88 (1984), petition for review filed, No. 85-7039 (9th Cir.
Jan. 22, 1985), wherein it found that an agency's selection of the
method of paycheck distribution concerns the methods and means of
performing work within the meaning of section 7106(b)(1) of the Statute
/1/ and thus is negotiable only at the election of the Agency. /2/
Thus, the Authority finds that Respondent NUSC's refusal to bargain
concerning a change in the method of paycheck delivery did not
constitute a violation of section 7116(a)(1) and (5) of the Statute.
In addition, the Authority finds that although NUSC refused to
bargain with the Union over the procedures to be observed in
effectuating the change and regarding appropriate arrangements for
adversely affected employees, pursuant to section 7106(b)(2) and (3) of
the Statute, /3/ no such duty to bargain arose herein inasmuch as the
impact or reasonably foreseeable impact of the change in working
conditions on bargaining unit employees was no more than de minimis.
Department of Health and Human Services, Social Security Administration,
16 FLRA No. 103 (1984) and Department of Health and Human Services,
Social Security Administration, Chicago Region, 15 FLRA No. 174 (1984).
The Authority makes such finding because the change from hand delivery
of paychecks to mail delivery would affect only newly hired employees
and would not apply to the established pay practices of unit employees.
Finally, the Authority adopts the Judge's conclusion that the
complaint must be dismissed as to Respondent Department of the Navy,
because the Authority has determined that the decision to change the
method of paycheck delivery does not give rise to a duty to bargain over
the substance of such change, and therefore the Department of the Navy
did not prevent Respondent NUSC from fulfilling any statutory bargaining
obligation with respect thereto. Accordingly, the consolidated
complaint shall be dismissed in its entirety.
ORDER
IT IS ORDERED that the consolidated complaint in Case Nos. 1-CA-30010
and 1-CA-30011 be, and it hereby is, dismissed.
Issued, Washington, D.C., June 28, 1985
Henry B. Frazier III, Acting
Chairman
William J. McGinnis, Jr., Member
FEDERAL LABOR RELATIONS AUTHORITY
-------------------- ALJ$ DECISION FOLLOWS --------------------
Geoffrey D. Spinks, Esq.
For the Respondents
Daniel Sutton, Esq.
For the General Counsel
Before: ELI NASH, JR., Administrative Law Judge
DECISION
Statement of the Case
Pursuant to a Consolidated Complaint and Notice of Hearing issued on
January 12, 1983 by the Regional Director for the Federal Labor
Relations Authority, Boston, Massachusetts, a hearing was held before
the undersigned on March 7, 1983 at Newport, Rhode Island.
This proceeding arose under the Federal Service Labor-Management
Relations Statute (herein called the Statute). It is based on amended
charges filed on January 5, 1983 by the National Association of
Government Employees, NAGE, Local R1-134 (hereinafter called Local
R1-134) and, by the Federal Union of Scientists and Engineers, NAGE,
Local R1-144 (hereinafter called Local R1-144) against the Department of
the Navy, Office of the Secretary, Washington, D.C., Naval Underwater
Systems Center, Newport, Rhode Island (herein called Respondent,
Respondent NUSC or Respondent Navy).
The Complaint alleged that on or about October 1, 1982, Respondent
unilaterally changed existing conditions of employment by implementing a
policy or requiring bargaining unit employees hired on or after October
1, 1982 to have their payroll checks mailed directly to their home
address or a financial institution and has refused to bargain with
either Local R1-134 or R1-144 concerning the change or the
implementation of such change.
Respondent's Answer denied the Commission of any unfair labor
practices.
All parties were represented at the hearing. Each was afforded full
opportunity to be heard, to adduce evidence, and to examine as well as
cross-examine witnesses. Thereafter, briefs were filed with the
undersigned which have been duly considered. /4/
Upon the entire record herein, from my observation of the witnesses
and their demeanor, and from all of the testimony and evidence adduced
at the hearing, /5/ I make the following findings and conclusions:
Findings of Fact
The essential facts are as follows:
Local R1-144 is and, at all times material herein has been the
certified exclusive representative for a bargaining unit consisting of
all Respondent NUSC's professional employees.
Local R1-134 is and, at all times material herein has been the
exclusive representative for a bargaining unit consisting of all of
Respondent NUSC's nonprofessional general schedule employees.
Respondent NUSC's employees are paid on a bi-weekly basis with the
Thursday following the end of the payroll period being designated as pay
day. For several years prior to October 1, 1982, Respondent NUSC
maintained a practice of hand delivering payroll checks to employees at
their worksites on payday. Having received their payroll checks at the
worksite, employees could, on payday, readily convert those checks to
cash during their normal workday either at an on-site check cashing
service provided by a credit union or by visiting a local bank or credit
union during a break.
About 2 or 3 years ago, Respondent NUSC implemented a new payroll
disbursing system called "Pay Deposited Quicker" (hereinafter called
PDQ). Under that system the individual employee had the option of
authorizing Respondent NUSC's payroll or disbursing office to mail his
or her payroll check directly to a financial institution or to a nonwork
address. Prior to October 1, 1982, participation in PDQ was voluntary
for all employees.
On August 4, 1982, S. R. Fisher, the Head of Respondent NUSC's Labor
and Employee Management Relations Division, issued a memorandum
entitled, "New Policy on Pay Checks" and forwarded two documents to the
Presidents of Locals R1-134 and R1-144 for their information advising
that any comments should be received by August 9, 1982. One of the
enclosures was a July 1982 message from the Chief of Naval Operations
directing Navy activities to review a "SECNAV Instruction 7200.17 of 6
October 1981" and ". . . take appropriate action to inform all new hires
beginning 1 October 1982 of this recent pay distribution policy, which
requires pay to be forwarded to a designated financial institution or
mailed to a nonwork address."
By memorandum dated August 9, 1982 and September 1, 1982,
respectively Locals R1-144 and R1-134 requested Respondent NUSC bargain
concerning the proposed change in the distribution of payroll checks.
Thereafter, Respondent NUSC refused to bargain with either Local R1-134
or R1-144 over either the decision to discontinue the practice of hand
delivery of payroll checks at the worksite for employees hired on or
after October 1, 1982 or the impact and implementation of such change.
In response to Local R1-134, Respondent NUSC explained that its refusal
to bargain was based on its contention that nothing in the applicable
collective bargaining agreement specifically required hand delivery of
payroll checks to employees at their worksites; whereas Local R1-144,
after initially being told that bargaining over the proposed change
would occur, was advised that Respondent NUSC had decided ". . . that
even though this (the elimination of hand delivery of payroll checks at
the worksite) was a change (of) an existing personnel policy and
practice, it was not a change which materially and substantially
affected employees."
On or about October 1, 1982, Respondent NUSC unilaterally implemented
the new policy of mailing payroll checks for all bargaining unit
employees hired on or about October 1, 1982 to a nonwork address. At
the time of the hearing, there were approximately 109 employees in the
nonprofessional bargaining unit represented by Local R1-134 and 22
employees in the professional bargaining unit represented by Local
R1-144 who have been affected by the new policy.
ISSUES
Whether agency management is obligated to bargain with an exclusive
representative of its employees concerning a decision to eliminate hand
delivery of payroll checks to bargaining unit employees at their
worksites and the impact and implementation of such decision;
Whether the implementation of the new pay policy in the instant cases
constituted a change in established conditions of employment which had a
substantial adverse impact on bargaining unit employees so that
Respondent NUSC was obligated to provide the Charging Party Unions with
an opportunity to bargain concerning such change and its impact and
implementation;
Whether Respondent NUSC was relieved of its statutory bargaining
obligations with regard to the new pay policy by virtue of the fact that
such policy was implemented pursuant to instructions issued by
Respondent Navy;
If Respondent NUSC was not relieved of its statutory bargaining
obligations with regard to the new pay policy, whether Respondent Navy
violated section 7116(a)(1) and (5) of the Statute by preventing
Respondent NUSC from fulfilling such obligations; and
Whether Respondent NUSC violated section 7116(a)(1) and (5) of the
Statute by refusing to bargain with the Charging Parties over the impact
and implementation of the new pay policy.
Discussion
A. Responsibility of Respondents
The Consolidated Complaint alleges that the Respondent violated
section 7116(a)(1) and (5) of the Statute by unilaterally instituting
changes in existing working conditions without bargaining about those
changes or their impact and implementation. General Counsel, in his
brief, insists that Respondent Navy violated the Statute by preventing
Respondent NUSC from fulfilling its statutory bargaining obligation with
regard to its decision to eliminate hand delivery of payroll checks to
new employees at their worksite. Being contingent on Respondent NUSC's
actions, the violation, in the matter, would have occurred on October 1,
1982, at which time NUSC implemented the new pay policy without
providing the local Unions an opportunity to bargain. Even assuming
that Respondent NUSC is not liable for Respondent Navy's refusal to
bargain about the decision to change the pay policy, the General Counsel
urges that Respondent NUSC is liable for its own refusal to bargain
about the change and the impact and implementation of the new pay
policy.
Respondent Navy rejects all attempts to attribute any violation of
section 7116(a)(1) and (5) to it and, in essence, contends that it is
not responsible for those violations alleged against Respondent NUSC.
In so doing, it makes, among other arguments, three basic points.
First, it argues that section 4.b.(1) and (2) of the SECNAV Instruction
7200.17 stipulates that hand delivery of paychecks be discontinued only
where it is feasible to do so. Respondent Navy thereby suggests that
circumstances exist in which it may not be feasible to discontinue the
practice of delivering paychecks by hand and thus no activity is
directed to implement the policy where it is not feasible to do so.
Second, Respondent Navy maintains that section 5.b.(4), (5), and (9) of
the Instruction recognizes that some constraints on the change may
result from bargaining agreements already in effect. For example,
section 5.b.(5) stipulates that hand delivery of pay and leave earnings
for current employees be discontinued only if current labor agreements
and resources permit. Respondent Navy also advises that such language
demonstrates that each activity retains the discretion necessary to
fulfill its collective bargaining obligations. Consequently, it argues
that it should not be liable for an activity's breach of this
obligation. Finally, Respondent Navy urges that it published and
distributed notification of the proposed changes far in advance of the
implementation date to the activities. With respect to the pre-hire
employee's provision, Respondent Navy allegedly gave activities 1 year
lead time to make the change. In situations where possible past
practices or contrary provisions of a collective bargaining agreement
might be involved, Respondent Navy allegedly gave activities a lead time
of 4 years. Even within this framework, the time limits provided the
activities seemingly were flexible.
Based on those reasons, and the fact that it had no existing
exclusive relationship with the Union's which would give rise to a
bargaining obligation Respondent Navy concluded that it cannot be held
responsible for the activity's failure to bargain with the local Unions.
The principle is well-settled is that "the acts and conduct of higher
level agency management may constitute an unfair labor practice when
such conduct prevents agency management at the level of exclusive
recognition from fulfilling its bargaining obligation under the
Statute." Department of Defense Schools, 11 FLRA 597 (1983). In a case
where an agency directs an activity to carry out a change in conditions
of employment without bargaining with the union and the activity has "no
choice but to follow the dictates" of the agency, the Authority has held
the agency exclusively liable for the violation. Department of the
Interior, Water and Power Resources Services, Grand Coulee Project,
Grand Coulee, Washington and Office of the Secretary, Department of the
Interior, Washington, D.C., 9 FLRA 385 (1982). The Authority reached a
similar conclusion in a case where an agency Regional Director issued a
memorandum to Bureau Chiefs and District Managers directing them to
implement immediately a policy which altered an established condition of
employment. There the District Manager was not found responsible for
the unilateral change since the action "merely complied with a direction
from agency management at a higher level;" the action was considered to
be simply ministerial. Social Security Administration and Department of
Health, Education and Welfare, Region VI, Social Security
Administration, Galveston, Texas, 10 FLRA 33 (1982). But, in a case
where an agency merely advised an activity that a contract proposal
submitted by the union was nonnegotiable, the activity, not the agency
was held responsible for a violation of section 7116(a)(1) and (5) of
the Statute. Kansas Army National Guard and National Guard Bureau, 10
FLRA 303 (1982). Where a particular subject matter is nonnegotiable
because, for example, it falls within management's rights under section
7106, bargaining over the implementation and impact of the changes will
be required. Social Security Administration, 8 FLRA 517 (1982), seeks
to resolve the question of whether the blame for the refusal to bargain
should fall on the agency or on the activity based on the Grand Coulee
case, supra.
Mainly, Respondent Navy contends that blame should rest on the
shoulders of the activity officials, if anywhere, because there was an
option to bargain under the terms of the SECNAV 7200.17 Instruction.
General Counsel, contrarily, declares that Respondent Navy is liable for
its refusal to bargain about the change in pay delivery procedures by
preventing Respondent NUSC from fulfilling its bargaining obligation
concerning the new policy and Respondent NUSC is liable for its refusal
to bargain about the change in paycheck procedure and impact and
implementation of this new policy.
Respondent Navy's arguments with respect to section 4.b.(2) and
5.b.(5) is that changes in the method of payment should be made only
"where feasible and to the maximum extent possible within current labor
agreement and resource constraints." Respondent Navy makes the point
that this discretionary language applies only to changes in the pay
distribution program for current employees and contains no language
dictating changes in the pay distribution procedures for employees hired
on or after October 1, 1982. Section 5.b.(5) states that all Navy
activities have the responsibility for:
Supporting the establishment of civilian pay distribution by
PDQ/Direct Deposit or mail upon entry of all civilian employees
hired by any (Department or Navy) activity on or after 1 October
1982.
The Complaint alleges that Respondent Navy violated the Statute by
refusing to bargain in good faith concerning the paycheck distribution
changes involving employees hired on or after October 1st-- in other
words, new employees. The General Counsel maintains that Respondent
NUSC "had no choice but to ministerially implement the provisions of the
(SECNAV Instructions)" with respect to new employees. I do not agree.
Section 5.b.(5) relating to new employees does not direct activities to
evade any bargaining obligation by establishing October 1, 1982 as the
cut off date on PDQ for new employees. It does, however, make
activities responsible for "supporting" that date as the optimum date.
Thus, it is found that the language of the SECNAV Instruction, without
more does not establish that Respondent Navy interfered with or
prevented Respondent NUSC from fulfilling its bargaining obligation.
I accept, therefore, Respondent Navy's position that its activities
all had discretion to bargain concerning the change and that it gave the
activities sufficient time to bargain about the proposed changes.
Failing to bargain, therefore, must as Respondent Navy maintains fall
squarely on the activity's shoulders particularly, since its
instructions tended to encourage bargaining where current labor
agreements permitted. This factor distinguishes the instant matter from
Social Security Administration, Galveston, Texas, 10 FLRA 33 (1982),
where the Regional Commissioner directed District and Branch Managers to
make certain changes only 12 days in advance of the changes sought,
thereby preventing them from bargaining with the local unions.
Nothing in the instant record disclosed that Respondent Navy did
anything more than issue the new regulation. If Defense Logistics
Agency, infra., is followed such action in and of itself, did not
prevent the activity from bargaining with local unions even for new
employees. For this singular reason, it is found that Respondent Navy's
action in merely issuing the regulation involved herein, without more,
did not violate the Statute. Accordingly, it is found and concluded
that the Complaint against Respondent Navy should be dismissed. /6/
B. Compelling Need
At the hearing and in its brief, Respondent maintains that compelling
need determinations should be made only under negotiability provisions
of section 7117(b) of the Statute. These provisions, Respondent argues,
prohibit a labor union from raising the issues under unfair labor
practice procedures and likewise prevents an Administrative Law Judge
from making such determinations with the General Counsel present.
Respondent apparently assumes that the existence of a regulation such
as the SECNAV Instruction automatically creates a bar to negotiations on
counter-proposals until the Authority determines that a compelling need
does not exist for the regulation. Respondent further pointed out that
a "no compelling need" determination issued by the Authority would not
retroactively render a refusal to bargain improper, but prospectively
the regulation could no longer serve as a bar to negotiation. The
result according to Respondent is, that even if the Authority were to
rule that there was no compelling need to alter the pay distribution
procedures, it could not be found liable for committing an unfair labor
practice.
The General Counsel characterizes Respondent's reliance on section
7117 of the Statute merely as an effort to evade its responsibility to
bargain with the Unions. In so doing, he urges that section 7117 was
designed to facilitate and not to frustrate the collective bargaining
process. In consequence, he would distinguish this case from section
7117(b)(1) proceedings because there is no collective bargaining
agreement at issue. Rather, he perceives the matter only as a
unilateral change in conditions of employment to which "compelling need"
is asserted as an unfair labor practice defense. The General Counsel
sees no reason to preclude the Authority from making a compelling need
determination within the context of an unfair labor practice proceeding.
State of Nevada National Guard, 7 FLRA 245 (1981). For these reasons,
the General Counsel asserted that the Authority, with the Administrative
Law Judge delegated to conduct unfair labor practice proceedings on its
behalf, has jurisdiction to evaluate a respondents' compelling need
defense in unfair labor practice proceedings. Contra U.S. Air Force
(Washington, D.C.) and U.S. Air Force, Electronic Systems Division,
Hanscom Air Force Base (Bedford, MA), Case No. 1-CA-853, OALJ-83-20
(1982). Based on this interpretation of precedent and the facts of the
case, the General Counsel urges that Respondents' compelling need
defense should be rejected.
Since Respondent did not produce any evidentiary support for its
compelling need assertions the General Counsel emphasized that no
compelling need in fact exists and Respondent NUSC therefore, was not
relieved of its bargaining obligation under the Statute simply because
the new pay policy was implemented pursuant to instructions issued by
the Respondent Navy. Defense Logistics Agency, et. al., 12 FLRA 424
(1983) decided after the hearing in the matter, plainly states that the
determination of whether or not a compelling need exists can
theoretically take place either in an unfair labor practice or in a
negotiability proceeding. However, when an exclusive representative has
selected the unfair labor practice forum and agency management raises as
an affirmative defense that it refused to bargain because there was a
compelling need for the regulation, the compelling need issue must
necessarily be decided in the unfair labor practice proceeding. Under
these circumstances, a respondent is required to come forward with
affirmative support for its assertion in an unfair labor practice
proceeding, just as it would in a negotiability proceeding.
Furthermore, the decision suggests that a respondent should raise the
compelling need issue in its answer to the complaint, rather than in its
post-hearing brief. However, the Authority considered, in that case,
whether the record provided sufficient proof for the existence of a
compelling need.
Section 2424.11 of the Authority's Rules and Regulations (5 CFR
2424.11 (1981)) provides the criteria for determining the compelling
need for agency rules and regulations under the negotiability procedures
established in section 7117(a)(2). These criteria also apply to
compelling need determinations made unfair labor practice proceedings.
State of Nevada National Guard, supra, and are as follows:
A rule or regulation demonstrates the existence of a compelling need
if one of the following criteria is met:
(a) The rule or regulation is essential, as distinguished from
helpful or desirable, to the accomplishment of the mission or the
execution of functions of the agency or primary national
subdivision in a manner which is consistent with the requirements
of an effective and efficient government.
(b) The rule or regulation is necessary to insure the
maintenance of basic merit principles.
(c) The rule or regulation implements a mandate to the agency
or primary national subdivision under law or other outside
authority, which implementation is essentially nondiscretionary in
nature.
5 CFR section 2424.11 (1981). Under the criterion (a), an agency must
establish that its regulation is essential, as distinct from being
merely helpful or desirable, by showing that the objective sought in the
regulation could not have been achieved by any other means. American
Federation of Government Employees, AFL-CIO, Local 3804, 7 FLRA 217
(1981). Similarly, under criterion (b), an agency must show that its
regulation is necessary as the only means of attaining that objective.
If a respondent does not prove that it had a compelling need for
refusing to bargain about changes made as a result of an agency-wide
rule or regulation and there is no merit to any of its other defenses,
respondent's action constitutes an unfair labor practice within the
meaning of the Statute. Defense Logistics Agency, supra.
In light of the Defense Logistics Agency decision, the General
Counsel, in my view, successfully disposed of Respondent's argument that
a compelling need determination can only be made under the negotiability
provisions of section 7117 of the Statute. Clearly such determinations
now can be made within the context of an unfair labor practice
proceeding and the unfair labor practice forum is the proper tribunal
for agency management to raise as an affirmative defense that it refused
to bargain on the basis that a compelling need existed for the
regulation in question. Defense Logistics Agency, supra.
Consistent with its belief that the compelling need issue has no
place in an unfair labor practice proceeding, Respondent did not raise
the issue as an affirmative defense in response to the Complaint nor did
it attempt to present evidence bearing on the compelling need issue.
Neither was this defense raised in any of the memoranda exchanged
between the parties prior to the hearing. Furthermore, no facts were
alleged either at the hearing or in the post-hearing brief nor did
Respondent at any time seek to substantiate a compelling need,
affirmative defense. In its brief, however, Respondent attempted to
illustrate that it had important reasons to seek the changeover from
worksite delivery of the paychecks to automatic deposit of employee
checks. According to Respondent's brief, dramatic savings ($4.5 million
per year) is the cost of paying employees if 180,000 employees salaries
were mailed directly to each financial institution (using master checks
for each institution) would result. Further, the use of electronic
funds transfer would provide for better cash management and serves as a
savings in interest costs. Although none of these savings is assured if
the Navy mails the paychecks to the employees' homes, it does, however,
demonstrate the potential for saving the government money if employees
readily adopt the PDQ.
To determine whether or not these reasons constitute a compelling
need to make changes in the regulation without bargaining with the
exclusive representative, I turn to a consideration of the three crucial
criteria provided in section 2424.11 of the Authority's Rules and
Regulations. According to the first criterion, the regulation must be
essential and not merely helpful or desirable. Clearly, the practice of
directly depositing employee salaries at the banks where employees have
their accounts would save the Navy money in terms of printing checks and
distributing them. But it is controvertible whether mailing checks to
employees' homes, which remains one of the options under the SECNAV
Instruction, really saves the Navy any money. In this regard, there are
still costs associated with printing the checks, providing and stuffing
the envelopes and mailing the checks to employees' homes. Leaving aside
these points, serious doubts are raised when considering whether the
program is essential to the Navy. In short, although the program seems
helpful, it has not been established that it is essential. Furthermore,
in terms of the second criterion, there is no substantiation that the
program is necessary for the Department of the Navy to insure the
maintenance of basic merit principles. There may well be alternative
methods which would save the Department of the Navy money in disbursing
employee salaries. The last criterion, concerning implementation which
is essentially nondiscretionary in nature, is in no manner supported by
any evidence. Accordingly, and for the above reasons, it is found and
concluded that the changes announced in the SECNAV Instruction do not
warrant a finding that a compelling need for the regulation existed.
C. Section 7116(a)(1) and (5) Violation
The Statute requires notice to exclusive bargaining representatives
of proposed changes of conditions of employment and, upon request, good
faith bargaining. An agency or its activity is not free to unilaterally
change conditions of employment either through memoranda or a
regulation, except as provided by section 7117 of the Statute. Under
section 7117, an agency is not required to bargain about a
Government-wide rule or regulation; nor is it required to bargain about
an agency-wide rule or regulation for which a compelling need has
already been found. /7/ See National Treasury Employees Union, 9 FLRA
983 (1982). It is also well-established that conditions of employment
include those established by contract, as well as those established
through past practices, the result of tacit or informal agreement.
Department of Defense, Department of the Navy, Polaris Missile Facility
Atlantic, Charleston, South Carolina, 6 FLRA 372 (1981), citing
Department of the Navy, Naval Underwater Systems Center, Newport Naval
Base, 3 FLRA 413 (1980). In this regard, "a practice will be considered
to have ripened into a term or condition of employment if it has been
consistently exercised for an extended period of time with the knowledge
of respondent's supervisors." As a consequence, management is often
required to negotiate about conditions of employment whose terms may not
be expressly stated in the contract between the parties.
The material facts reveal that the two local Unions involved herein
were notified concerning proposed changes in the distribution of payroll
checks and both requested to bargain about the proposed changes. The
facts also disclose that subsequently, Respondent NUSC met with
representatives from both Unions to discuss the SECNAV Instruction, but
refused to bargain either on the change in the pay procedures or on the
impact and implementation of the change. Further, by letter dated
October 5, 1982, Respondent NUSC explained that nothing in the current
agreement between Local R1-134 and Respondent NUSC required employees to
receive their paychecks via hand delivery so the change was, therefore,
permissible. Similarly, in a letter dated October 6, 1982, Respondent
refused to negotiate with Local R1-144 representatives because the
change, though it represented a change in an existing personnel policy
and practice, did not materially and su0stantially affect employees.
As already noted, although the established practice of paying
employees at their worksite was not a matter of contract the a.tivity is
not necessarily released from its obligation to bargain. See Polaris
Missile Facility Atlantic, supra. Clearly, Respondent NUSC refused to
negotiate with either R1-134 or R1-144 about changing the practice of
hand delivering the employee's paychecks.
Although the Authority has not, to date, addressed the question as to
the extent of an agency's bargaining obligation with regard to a
decision to alter a practice of hand delivering payroll checks to
bargaining unit employees at their worksites, Administrative Law Judge
Devaney recently considered a similar issue in United States Department
of Defense, Department of the Army, McAlester Army Ammunition Plant,
Case No. 6-CA-1041, OALJ-82-77 (1982), exceptions filed (FLRA May 30,
1982). There, the activity decided to eliminate the traditional
practice of providing bargaining unit employees with the option of
receiving hand delivery of their payroll checks at their worksites.
While the activity therein, notified the exclusive representative of
this change, it asserted that the decision was nonnegotiable in that it
involved the exercise of reserved "management rights" under section 7106
of the Statute and that its bargaining obligation was limited to the
impact and implementation of the change. Judge Devaney rejected the
activity's assertions of nonnegotiability (i.e., that the decision to
eliminate hand delivery involved the activity's right under section
7106(a)(1) of the Statute to determine its budget; OALJ-82-77 at 18-24;
or internal security; OALJ-82-77 at 24-27) and concluded that the
activity had refused to bargain over the decision to change an
established condition of employment in violation of section 7116(a)(1)
and (5) of the Statute. In reaching this conclusion, Judge Devaney
stated:
Pay practices are "conditions of employment" within the meaning
of the Statute. Indeed, other than employment itself, no other
matter is of more immediate, direct, or personal concern to each
employee than pay practices. Specifically, the hand delivery of
paychecks on the premises of payday had been an established
condition of employment since the inception of the Plant in 1941
and had been continued without change from the date the Department
of the Army assumed control on October 1, 1977. In connection
therewith, a bank provided facilities, on the premises, to cash
paychecks on payday. Of course, employees relied on receipt of
their checks on payday and on the assurance that they could
convert those checks to cash on payday. Mailing of paychecks,
whether to a home address or to a bank, altered the prior
practice, frequently, as the record shows, to the considerable
inconvenience and expense to employees.
(Quotations in original) OALJ-82-77 at 22. In spite of Respondent's
urging to the contrary, his conclusions, in my opinion, not only find
support in a logical reading of the Statute, but in a substantial body
of law developed in the private sector where the National Labor
Relations Board has consistently held that unilateral changes in the
time and manner of payment of employees' wages are violative of section
8(a)(1) and (5) of the National La0or Relations Act, as amended, 29 USC
158(a)(,) and (5). See e.g. Superior Rambler, 150 NLRB 1264, 1268
(1965) (unilateral change in payday from Saturday to Friday); American
School Supply Co., 157 NLRB 473, 474 (1966) (unilateral change in payday
from every other Monday to every other Friday); and Southern Florida
Hotel and Motel Assn., 245 NLRB 561, 569 (1970) (unilateral change in
time and manner of paying tips from payment within 48 hours of a
function to payment every other week).
Therefore, it is found, that agency management is obligated under the
Statute to bargain with an exclusive representative of its employees
concerning a decision to eliminate hand delivery of payroll checks to
bargaining unit employees at their worksites and also the impact and
implementation of the decision since it involves a change in pay
practices which are negotiable conditions of employment. /8/
With the exception of the scope of the change (i.e., the new pay
policy involved herein affected only new employees whereas the change in
McAlester affected all employees) the instant cases do not differ
markedly from McAlester. Thus, all of the cases involve the same basic
change in conditions employment-- the elimination of hand delivery of
payroll checks and the requirement that employees have their checks
mailed directly to a non-work address or a financial institution.
Moreover, the impact of the new pay policy on affected employees at
Respondent NUSC is essentially the same as that which was found to be
substantial in McAlester. That is, the decision to eliminate hand
delivery of payroll checks at the worksite operates to deprive affected
employees of the assurance that they will receive their payroll checks,
on time every other Thursday and 0e able to convert those checks to cash
that same day during their normal working hours. In this regard, it is
undisputed that Respondent NUSC has seldom, if ever, failed to deliver
payroll checks on the designated payday and that procedures were
established whereby employees could readily "cash" their checks during
their normal working hours on payday. New employees, on the other hand,
are required to assume the risk that their payroll checks may not arrive
at their bank or nonwork address until after payday. /9/
In such circumstances, it is plain that the new pay policy is neither
insignificant nor trivial. While Respondent contends that the new pay
policy did not involve any substantial impact, such contention is
negated by the testimony, S. R. Fisher, Chief of Labor and Employee
Management Relations at Respondent NUSC. In this regard, Mr. Fisher
candidly testified that Respondent NUSC recognized that the decision to
require new employees to have their payroll checks mailed directly to a
nonwork address or financial institution was of such import to affected
employees that Respondent made regular efforts to inform its new
employees as to the new means by which their payroll checks would be
delivered. Thus, in Respondent's own mind this change in an established
condition of employment and indeed had a substantial adverse impact on
affected bargaining unit employees. Accordingly, it is found and
concluded that Respondent NUSC was, obligated to provide both Local
R1-134 and R1-144 with an opportunity to bargain concerning the new pay
policy and its impact and implementation.
Having found that Respondent Navy did not engage in any unfair labor
practices in violation of section 7116(a)(1) and (5) of the Statute, it
is recommended that the Consolidated Complaint insofar or it alleges
that the Department of the Navy committed any unfair labor practices, be
dismissed in its entirety. Having further found that Respondent NUSC
has engaged in, and is engaging in certain conduct in violation of
section 7116(a)(1) and (5) of the Statute it is recommended that the
Authority issue the following:
ORDER
Pursuant to Section 18 of the Statute, 5 U.S.C. 7118 and, section
2423.29 of the Regulations, 5 C.F.R. 2423.29, the Authority hereby
orders that Department of the Navy, Naval Underwater Systems Center
(Newport, Rhode Island), shall:
1. Cease and desist from:
(a) Instituting any change in the established policy and
practice of the hand delivery of employee paychecks on the
premises without first notifying the Federal Union of Scientists
and Engineers, NAGE, Local R1-144 and National Association of
Government Employees, NAGE, Local R1-134, the exclusive
representatives of its employees, and affording such
representatives the opportunity to negotiate in good faith, to the
extent consonant with law, regulations and the Statute, prior to
any decision concerning such policy and practice.
(b) In any like or related manner, interfering with,
restraining, or coercing its employees in the rights assured by
the Statute.
2. Take the following affirmative action in order to effectuate the
purposes and policies of the Statute:
(a) Rescind and withdraw its decision on "New Policy on Pay
Checks," unlawfully announced by its memorandum of August 4, 1982,
and implemented on October 1, 1982.
(b) Forthwith reinstate the policy and practice of the hand
delivery of paychecks on the premises as it existed prior to
October 1, 1982.
(c) Notify the Federal Union of Scientists and Engineers, NAGE,
Local R1-144 and National Association of Government Employees,
NAGE, Local R1-134 of any proposed change regarding the hand
delivery of paychecks on the premises and, upon request, negotiate
with such representative, to the extent consonant with law and
regulations, on any such proposal.
(d) Post at its facility at the Department of the Navy, Naval
Underwater Systems Center (Newport, Rhode Island) copies of the
attached notice marked "Appendix", on forms to be furnished by the
Federal Labor Relations Authority. Upon receipt of such forms,
they shall be signed by the Commanding Officer and they shall be
posted for 60 consecutive days thereafter in conspicuous places,
including all places where notice to employees are customarily
posted. The Commanding Officer shall take reasonable steps to
insure that such notices are not altered, defaced, or covered by
any other material.
(e) Notify the Regional Director of the Federal Labor Relations
Authority for Region I, whose address is: 441 Stuart Street, 9th
Floor, Boston, Massachusetts 02116, in writing, within 30 days
from the date of this Order, what steps have been taken to comply
therewith.
IT IS FURTHER ORDERED that the Consolidated Complaint insofar as it
alleges a violation of the Statute by the Department of the Navy, be,
and it hereby is dismissed.
ELI NASH, JR.
Administrative Law Judge
Dated: September 29, 1983
Washington, DC
APPENDIX
NOTICE TO ALL EMPLOYEES
PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
RELATIONS
AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
OF TITLE
5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
RELATIONS
STATUTE WE HEREBY NOTIFY OUR EMPLOYEES THAT:
WE WILL NOT institute any change in the established policy and
practice of the hand delivery of employee paychecks on the premises
without first notifying the Federal Union of Scientists and Engineers,
NAGE, Local R1-144 and National Association of Government Employees,
NAGE, Local R1-134, the exclusive representative of our employees, and
affording it the opportunity to negotiate in good faith, to the extent
consonant with law and regulations, prior to any decision concerning
such policy and practice.
WE WILL NOT in any like or related manner, interfere with, restrain
or coerce our employees in the exercise of their rights assured by the
Federal Service Labor-Management Relations Statute.
WE WILL rescind and withdraw the decision on "New Policy on Pay
Checks," which we unlawfully announced by the memorandum dated August 4,
1982, and which we implemented on October 1, 1982.
WE WILL forthwith reinstate the policy and practice of the hand
delivery of payroll checks on the premises as it existed prior to
October 1, 1982.
(Agency or Activity)
Dated: By: (Signature)
This Notice must remain posted for sixty (60) consecutive days from
the date of posting and must not be altered, defaced, or covered by any
other material.
If employees have any questions concerning this Notice or compliance
with any of its provisions, they may communicate directly with the
Regional Director of the Federal Labor Relations Authority, Region I,
whose address is: 441 Stuart Street, 9th Floor, Boston, Massachusetts
02116 and whose telephone number is (617) 223-0920.
--------------- FOOTNOTES$ ---------------
/1/ Section 7106(b)(1) provides in pertinent part:
Sec. 7106. Management rights
* * * *
(b) Nothing in this section shall preclude any agency and any
labor organization from negotiating--
(1) at the election of the agency. . . . on the technology,
methods, and means of performing work(.)
/2/ In view of the Authority's Decision herein, it is unnecessary to
address the Respondents' assertion that a compelling need exists under
section 7117 of the Statute for the agency regulation involved herein.
/3/ Section 7106(b)(2) and (3) of the Statute provides:
(b) Nothing in this section shall preclude any agency and any
labor organization from negotiating--
* * * *
(2) procedures which management officials of the agency will
observe in exercising any authority under this section; or
(3) appropriate arrangements for employees adversely affected
by the exercise of any authority under this section by such
management officials.
/4/ Respondent, on May 6, 1983 contends that the General Counsel in
disregard of section 2423.25 of the rules and regulations failed to
serve it with a brief in this matter. The General Counsel responded on
May 11, 1983. A review of the service sheet attached to the General
Counsel's brief shows that while the Department of the Navy was timely
served, the General Counsel inadvertently failed to address this brief
specifically to Respondent's Counsel. Absent any showing of prejudice
or harm by this inadvertence, Respondent's request that the entire brief
be given no consideration and returned to the General Counsel, is
denied.
/5/ The General Counsel's unopposed motion to correct the transcript
is granted.
/6/ In view of the above finding, it is unnecessary to address
numerous other arguments raised on behalf of the Department of the Navy
urging dismissal of all allegations of the Complaint involving the
Respondent Navy. It is also unnecessary to rule on Respondent Navy's
motion to sever it from this matter.
/7/ No exception to bargaining can be granted to Respondent pursuant
to section 7117(a)(1) because the SECNAV Instruction is an agency-wide
regulation rather than a Government-wide rule or regulation.
/8/ Respondents' assertion that the method of distributing employees'
payroll checks is expected from an agency's duty to bargain because it
is " . . . a matter directly related to the work of employees and the
activity . . . " is wide of the mark. Assuming that Respondent relies
on section 7106(a)(1) of the Statute which reserves to agency management
the right to determine its " . . . mission, budget, organization, number
of employees, and internal security practices . . . ." As noted above,
the contention that the decision to eliminate hand delivery of payroll
checks is directly related to ah agency's budget or internal security
practices was specifically rejected in McAlester. Similarly,
Respondents' apparent contention that "substantive" bargaining over the
new pay policy would, somehow require it to alter its mission is wholly
lacking in any factual basis and must also be rejected. cf.
Philadelphia Naval Shipyard, 3 FLRA 437 (1980) (proposal that, for
purposes of applying the overtime provisions of section 7(k) of the Fair
Labor Standards Act, the "work period" would consist of 7 days does not
directly interfere with the agency's right, under section 7106(a)(1) of
the Statute, to determine its organization or number of employees).
/9/ At the hearing, Respondents, argued that, considering the new pay
policy was imposed only on new employees, who never enjoyed hand
delivery of the payroll checks at the worksite, there is no change in
any employee's established conditions of employment and, therefore, no
resultant bargaining obligation. Respondents' position appears to be
that agency management is free to unilaterally establish new conditions
of employment provided that it does so prospectively or in the form of a
"pre-hiring requirement." This novel approach is without precedent, and
is fundamentally at odds with the Statute's concept of collective
bargaining. In this regard, section 7114(a)(1) of the Statute, in
pertinent part, provides that an exclusive representative " . . . is
entitled to act for, and negotiate collective bargaining agreements
covering, all employees in the unit." Respondent's reasoning disparages
the federal collective bargaining process. Under its theory agency
management could unilaterally exempt all new employees from coverage
under a negotiated agreement and by characterizing such exemption as a
"pre-hiring requirement" completely dissipate, in time, any support for
effective collective bargaining. Such a result surely was not
anticipated by the Statute, and, therefore, must be rejected.