19:0052(7)CA - Navy, Washington, DC and Navy, Naval Supply Center, Oakland, CA and AFGE Local 1533 -- 1985 FLRAdec CA
[ v19 p52 ]
19:0052(7)CA
The decision of the Authority follows:
19 FLRA No. 7
DEPARTMENT OF THE NAVY
WASHINGTON, D.C.
and
DEPARTMENT OF THE NAVY
U.S. NAVAL SUPPLY CENTER
OAKLAND, CALIFORNIA
Respondents
and
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, LOCAL 1533, AFL-CIO
Charging Party
Case No. 9-CA-30108
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
complaint and recommending dismissal of the complaint as to that
Respondent. The Judge further found that the U.S. Naval Supply Center
(NSC) had engaged in the 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 NSC filed
exceptions to the Judge's Decision, and the General Counsel filed
cross-exceptions and a motion to strike Respondent NSC's exceptions.
/1/ Respondent NSC filed a response to the motion to strike its
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.
Contrary to the Judge, the Authority finds that Respondent NSC did
not violate section 7116(a)(1) and (5) of the Statute when it failed and
refused to bargain with the American Federation of Government Employees,
Local 1533, AFL-CIO, the exclusive representative of a unit of employees
at the NSC, concerning a proposed change in the method of paycheck and
savings bond distribution. Thus, 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 the process which an agency adopts to fulfill its
payroll obligation so as to ensure the continued, uninterrupted
operation of the agency constitutes a support operation without which
the agency's mission could not be accomplished. Thus, the Authority
found that mission-related matters which fall within the meaning of
"performing work" under section 7106(b)(1) include support functions
which are integrally related to the agency's mission. In Federal
Employees Metal Trades Council, the Authority found a proposal
pertaining to the method of paycheck distribution to concern the methods
and means of performing work, i.e., the agency's payroll function,
within the meaning of section 7106(b)(1) of the Statute /2/ and thus
negotiable only at the election of the agency. /3/ Thus, in the
circumstances of this case, the Authority finds that Respondent NSC'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. Similarly, the Authority finds that there is no Agency
obligation to bargain over its decision to change the method of
distributing savings bonds. In this regard, the Authority finds that
inasmuch as an agency's distribution of savings bonds is a part of the
method by which the agency fulfills its payroll obligation, as would be
other things such as paycheck distribution, accounting for leave,
overtime, compensatory time and tax deductions, it too concerns the
methods and means of performing work within the meaning of section
7106(b)(1) of the Statute and is negotiable only at the election of the
Agency. See Federal Employees Metal Trades Council, AFL-CIO, supra.
Therefore, the Authority finds that Respondent NSC's refusal to bargain
concerning a change in the method of distributing savings bonds did not
constitute a violation of section 7116(a)(1) and (5) of the Statute.
In addition, 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 NSC from fulfilling any statutory bargaining
obligation with respect thereto. Therefore, the complaint shall be
dismissed in its entirety.
ORDER
IT IS ORDERED that the complaint in Case No. 9-CA-30108 be, and it
hereby is, dismissed.
Issued, Washington, D.C. July 11, 1985
Henry B. Frazier III, Acting
Chairman
William J. McGinnis, Jr., Member
FEDERAL LABOR RELATIONS AUTHORITY
Case No. 9-CA-30108
-------------------- ALJ$ DECISION FOLLOWS --------------------
Mr. W. Don Wilson and
Mr. Wayne J. Peterson
For the Respondents
Josanna Berkow, Esq.
For the General Counsel
Mr. Peter Lower
For the Charging Party
Before ELI NASH, JR.
Administrative Law Judge
DECISION
Statement of the Case
Pursuant to a Complaint and Notice of Hearing issued on March 21,
1983 by the Acting Regional Director for the Federal Labor Relations
Authority, San Francisco, California Region, a hearing was held before
the undersigned on April 18, 1983 at San Francisco, California.
This proceeding arose under the Federal Service Labor-Management
Relations Statute (herein called the Statute). It is based on a charge
filed on December 29, 1982 and amended on March 14, 1983 by the American
Federation of Government Employees, Local 1533, AFL-CIO (herein called
the Union) against the Department of the Navy, Washington, D.C. (herein
called Respondent Navy) and the Department of the Navy, U.S. Naval
Supply Center, Oakland, California (hereinafter called Respondent NSC).
The Complaint alleges that since on or about September 8, 1982,
Respondent NSC in accordance with policies promulgated by Respondent
Navy has failed and refused to bargain with the Union concerning the
substance of a proposed change in paycheck and savings bond
distribution.
Respondents Answer denied the Commission of any unfair labor
practices.
All parties were represented at the hearing and each was afforded
full opportunity to be heard, to adduce evidence, and examine as well as
cross-examine witnesses. Thereafter briefs were filed with the
undersigned. /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 material facts, as provided by stipulation, are as follows:
The Union at all times material herein, has been a labor organization
within the meaning of section 7103(a)(4) of the Statute.
At all times material herein, Respondent Navy has been, and is, an
agency within the meaning of section 7103(a)(3) of the Statute.
At all times material herein, Respondent NSC, an activity of the
Department of the Navy, has been, and is, an agency within the meaning
of section 7103(a)(3) of the Statute.
The Union at all times material herein, has been certified as the
exclusive representative of an appropriate unit of employees of Naval
Supply Center, Oakland, California.
Prior to January 14, 1983 all employees in the unit described above
had the option of receiving their paychecks and savings bonds at their
work location or at a nonwork address. This option had been available
to civilian employees at the Naval Supply Center, Oakland, California
for at least 30 years.
Beginning on December 11, 1982 through January 21, 1983 Respondent
NSC, through its publication Party Line, announced to all its employees
that effective on the January 14, 1983 payday, paychecks for employees
hired on or after October 1, 1982 would be mailed to a nonwork address.
On or about January 14, 1983, Respondent NSC unilaterally implemented
new pay distribution procedures for employees in the unit whereby all
employees hired on or after October 1, 1982 were required to have their
paychecks and savings bonds either directly deposited in a financial
institution or delivered to a nonwork address.
The new prohibition against worksite paycheck and savings bond
delivery was applied to 115 temporary bargaining unit employees who were
terminated for 1 day and rehired by Respondent NSC on October 1, 1982.
Prior to the date of their rehire, these employees had enjoyed the
option of worksite pay delivery.
On or about December 7, 1981, Labor Relations Specialist Wayne
Peterson wrote to Union Business Agent Peter Lowe, enclosing a copy of
SECNAV Instruction 7200.17 which set forth policies for military and
civilian pay services and stated that Respondent NSC intended to
discontinue delivery of paychecks and savings bonds at employees' work
locations as soon as possible and that employees would be given the
option of having their pay and savings bonds directly deposited into
bank accounts or mailed to a nonwork address.
On or about December 14, 1981, Business Agent Lowe responded to
Peterson's letter requesting negotiations during a scheduled meeting of
December 17, 1981, on SECNAV Instruction 7200.17.
About December 17, 1981 and again on January 6, 1982, representatives
of Respondent NSC and the Union met for collective bargaining on the
proposed change in the pay policies set forth in Peterson's letter of
December 7, 1981. No agreement was reached and Respondent NSC
implemented the changes in pay procedures on February 1, 1982 for
employees hired on or after that date.
Subsequently, on February 10, 1982, the Union filed an unfair labor
practice charge (Case No. 9-CA-20154) alleging that NSC's refusal to
bargain on the changes in pay policies violated section 7116(a)(1), (5)
and (8) of the Statute. On May 20, 1982, the Acting Regional Director
for Federal Labor Relations Authority, Region IX, approved a bilateral
settlement agreement between Respondent NSC and the Union which
contained the following language:
WE WILL NOT implement any changes regarding pay procedures,
savings bonds, and leave and earnings statements for employees
represented by the American Federation of Government Employees,
Local 1533, AFL-CIO (AFGE) until we complete our bargaining
obligations with AFGE Local 1533.
Employees who have requested that their paychecks, savings
bonds, and/or leave and earnings statements be sent to a nonwork
address will be given the opportunity to request that these items
be sent to their work address.
Subsequently, on or about May 5, 1982, the Union submitted a
bargaining proposal to Respondent NSC giving employees the option of
participating in the direct deposit mail system or having their
paychecks, leave and earnings statements and savings bonds hand
delivered at their worksite.
Sometime around June 11, 1982, Respondent NSC submitted a
counterproposal to the Union under which current employees would have 6
months to elect either to enroll in the direct deposit program or have
their paychecks mailed to a nonwork address and new employees would be
given 3 months from their date of entry to choose one of the same
options. The Union resubmitted its May 5, 1982 proposal on or about
July 8, 1982.
Around July 22, 1982, Respondent NSC wrote and acknowledged receipt
of the Union's July 8, 1982 proposal and stated it would soon submit its
counterproposal.
On August 19, 1982, Respondent NSC advised the Union that, in
accordance with Navy's pay policies as promulgated, it intended to
implement a policy whereby all employees hired on or about October 1,
1982 would be required to receive their paychecks and savings bonds at a
nonwork address. Respondent NSC further advised the Union that it would
bargain only on the impact and implementation and not the substance of
the new policy.
By letter dated September 8, 1982, the Union requested negotiations
on the substance of the change in paychecks and savings bonds
distribution described and submitted its counterproposal, under which
new employees would not have to accept direct deposit as a condition of
employment, but would have the same options as current employees.
On September 16, 1982, Respondent NSC refused to negotiate with the
Union concerning the substance of its proposal to change paychecks and
savings bonds distribution on the grounds that said change constituted
"technology, methods, and means of performing work" under Section
7106(b)(1) of the Statute and because such negotiations were barred by
an agency-wide regulation for which Respondent NSC asserted that a
compelling need exists under Section 7116(a)(3) of the Statute.
In correspondence dated September 30, 1982 the Union reiterated its
prior requests to negotiate on the proposed paychecks/savings bonds
distribution policy for new employees. Respondent NSC again refused to
negotiate on the substance of said policy by letter dated October 8,
1982.
Issues
Whether Respondents' Motion to Sever Charges Against Respondent Navy
should be denied.
Whether Respondents' decision to eliminate delivery of paychecks and
savings bonds to bargaining unit employees at their worksite is fully
negotiable condition of employment.
Whether Respondents' decision to eliminate delivery of paychecks and
savings bonds to bargaining unit employees at their worksite was a
change in existing conditions of employment which gave rise to an
obligation to negotiate on the substance of such change.
If so, whether Respondent NSC's refusal to bargain was justified by
the fact that the new pay distribution policy was implemented pursuant
to agency-wide instructions.
If not, whether Respondent Navy violated 5 U.S.C. 7116(a)(1) and (5)
by its interference with Respondent NSC's obligation to negotiate with
the Union on the new pay distribution policy.
If not, whether, Respondent NSC violated 5 U.S.C. 7116(a)(1) and (5)
by its refusal to negotiate on the substance of the new pay distribution
policy.
Discussion
A. Responsibility of Respondents
The Complaint alleges that Respondent Navy and Respondent NSC
violated section 7116(a)(1) and (5) of the Statute by unilaterally
instituting changes in existing working conditions without bargaining
about the substance of the change. General Counsel asserts that
Respondent Navy violated the statute by interfering with and preventing
Respondent NSC from fulfilling its statutory bargaining obligation with
regards to its decision to eliminate hand delivery of payroll checks and
savings bonds to new employees at their worksite. Being contingent on
Respondent NSC's actions, the violation, in the matter thus occurred on
January 14, 1983 at which time NSC implemented the new pay policy
without providing the local Union an opportunity to bargain. Even
assuming that Respondent NSC is not liable for Respondent Navy's refusal
to bargain about the decision to change the pay policy, the General
Counsel maintains that Respondent NSC is nonetheless liable for its
refusal to bargain about the substance of the change.
Respondent Navy raises arguments which it asserted before the
undersigned in a matter involving substantially the same issues. That
decision Department of the Navy, Washington, D.C. and Department of the
Navy, Naval Underwater Support Systems, Case Nos. 1-CA-30010 and
1-CA-30011 (OALJ-83-138 (1983)). Respondents in both cases raise
several basic points regarding the responsibility of the Department of
the Navy. In this matter Respondents argue first that SECNAV
Instruction 7200.17 was a valid exercise of the Navy's regulatory
authority to govern its agency. Second, that the instruction does not
require any activity to violate the provisions of any collective
bargaining agreement with provisions at odds with the terms of the
instructions. Third, the instruction itself does not foreclose or
supersede any bargaining obligations whatsoever at the level of
recognition at any naval activity. Fourth, that section 5.b.(5) of the
instruction did not alter or change any established pay practice, since
no employee hired prior to October 1, 1982 had that practice altered or
stopped. Fifth, that the instruction serves as a valid bar to
negotiations at any activity unless and until the Authority determines
pursuant to section 7117 of the Statute that no compelling need exists.
Respondent also suggests that such language indicates that each activity
retains the discretion necessary to fulfill its collective bargaining
obligations. Consequently, it is argued that the Navy should not be
liable for the 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, the Navy
gave the 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, the 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, Respondent Navy, consistent with its argument
in the Newport case, supra, concluded that it cannot be held responsible
for the activity's failure to bargain with the local Union.
It is a well-settled principle 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 where a 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 as such action "merely complied with a direction
from agency management at a higher level;" the action was found 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 simply 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 is
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.
On the whole, Respondents contend 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, on the other hand, contends that the Respondent Navy is
responsible since it interfered with its activities bargaining
obligations and that Respondent NSC is liable for refusing to bargain
about the substance change in this new policy.
The Respondent Navy's argues with respect to section 4.b.(2) and
5.b.(5) state that changes in the method of payment should be made
"where feasible and to the maximum extent possible within current labor
agreement and resource constraints." The Navy points out that this
discretionary language applying only to changes in the pay distribution
program for current employees. That section contains, no language
mandating 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 of 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 NSC
"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 NSC from fulfilling its bargaining obligation.
Respondent Navy's position that the activities had discretion to
bargain by pointing to the fact that it gave the activities sufficient
time to bargain about the proposed changes and that the issuance of the
instruction did not foreclose bargaining at the level of recognition is,
therefore accepted. This factor distinguishes the instant matter from
Social Security Administration, Galveston, Texas, 10 FLRA 33 (1982),
where the Regional Commissioner directed the 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 demonstrates that the Navy did anything
more than issue the new regulations. If, Defense Logistics Agency,
infra, is followed that action alone does not constitute interference
nor does it, based on the wording of the instruction, preclude
activities from bargaining with local unions even for new employees.
For this reason, it is found and concluded that Respondent Navy did not
interfere with Respondent NSC's bargaining obligation, in violation of
the Statute. Accordingly, and consistent with the findings in the
Newport case, supra, 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 argues that compelling
need determinations should be made only under negotiability provisions
of section 7116(b) of the Statute. These provisions, Respondent
maintains 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 points 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 as Respondent envisions 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 as an effort to evade its responsibility to bargain
with the Union. The General Counsel urges that section 7117 was
designed to facilitate and not to frustrate the collective bargaining
process. Accordingly, 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 an
unilateral change in conditions of employment to which "compelling need"
is asserted as an unfair labor practice defense. Further, the General
Counsel maintains that there is nothing 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 urges that the
Authority, with an Administrative Law Judge delegated to conduct unfair
labor practice proceedings on its behalf, has jurisdiction to evaluate a
respondents' compelling need defense. 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 NSC was not relieved of
its bargaining obligations under the Statute by virtue of the fact that
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 in the context of unfair labor
practice proceedings. See 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 2424.11 (1981). Under the criterion (a), an agency must
demonstrate 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 demonstrate 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,
the respondent is vulnerable to unfair labor practice violations under
the Statute. Defense Logistics Agency, supra.
In light of the Defense Logistics Agency decision, the General
Counsel, in my opinion, successfully refuted 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 there is a compelling need 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. While
Respondent raised compelling need to the Union as a bar to negotiations
no request for a compelling need determination was even filed in this
matter. Although Respondent did not attempt, at the hearing, to offer
evidence to support its compelling need defense, in its brief it
attempted to demonstrate that it had important reasons to seek the
changeover from worksite delivery of the paychecks to automatic deposit
of employee checks and savings bonds. 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 demonstrates the potential for saving the
government money if employees readily adopt the Direct Deposit Program.
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
illustrative 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 questionable whether
mailing checks to employees' homes, which remains one of the options
under the SECNAV Instruction, really saves the Navy any money: 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. For the above reasons and in
accordance with the previous findings in the Newport case, 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 a 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,
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 relevant facts disclose that the Union involved herein was
notified about the proposed changes in the distribution of payroll
checks and that it requested to bargain concerning the matter.
Subsequently, Respondent met with representatives from the Union to
discuss the SECNAV Instruction, but refused to bargain on the change in
the pay procedures although it did exchange proposals regarding the
impact and implementation of the change.
As already noted, although the established practice of paying
employees at their worksite was not a matter of contract, such fact does
not release the activity from its obligation to bargain. See Polaris
Missile Facility Atlantic, supra. Clearly NSC never considered
negotiations with the Union about the substance of changing the practice
of delivering the employees' paychecks.
Although the Authority has not, to date, addressed the question as to
the extent of an agency's bargaining obligations 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 obligations were 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 on 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; underlining added) OALJ-82-77 at 22.
Respondent's argument notwithstanding, Judge Devaney's conclusions, in
my opinion, not only find support in a logical reading of the Statute,
but in the substantial in the 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 Labor
Relations Act, as amended, 29 USC 158(a)(1) 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, agency management seemingly is obligated under the Statute
to bargain with an exclusive representative of its employees concerning
a decision to eliminate hand delivery of payroll checks and savings
bonds to bargaining unit employees at their worksites and the impact and
implementation of the decision because such decision involves a change
in pay practices which are negotiable conditions of employment.
As already noted, 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 case
does not differ markedly from McAlester. Thus, both cases involve the
same basic change in conditions employment-- the elimination of hand
delivery of payroll checks and savings bonds and the requirement that
employees have their checks and savings bonds mailed directly to a
non-work address or a financial institution. Moreover, the impact of
the new pay policy on affected employees at Respondent NSC 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 and savings bonds at the worksite operates to deprive affected
employees of the assurance that they will receive their payroll checks
and savings bonds on time and be able to convert those checks to cash
that same day during their normal working hours. In this regard, it is
uncontroverted that Respondent NSC 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. In such
circumstances, it becomes clear that the new pay policy was neither
insignificant nor trivial.
Respondent mistakenly assumed that it had no obligation to bargain on
the decision to effect the change in delivery of paychecks and savings
bonds. Such a mistake clearly prevented effective bargaining on the
impact and implementation of the change in policy. Moreover, since as
Respondent argues, Respondent NSC retained discretion to negotiate on
the new pay distribution policy under the SECNAV Instruction, it was
required to bargain to the full extent of that discretion. Department
of the Navy, Long Beach Naval Shipyard, 7 FLRA 362 (1981); National
Treasury Employees Union and Internal Revenue Service, 6 FLRA 522
(1981). The obligation, in my view, included the obligation to bargain
concerning the decision as it affected new employees. Thus, while
Respondent was willing to bargain on impact and implementation, it could
not, if bargaining were commenced fulfill its Statutory obligation since
its position precludes complete bargaining on the matter. Accordingly,
it is found and concluded that Respondent NSC was obligated to provide
the Union with an opportunity to bargain concerning the substance of the
new pay policy and its impact and implementation. Failing to do so, in
my view, constitutes a violation of section 7116(a)(1) and (5) of the
Statute.
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 Complaint insofar as it alleges a violation by
the Department of the Navy, be dismissed, in its entirety. Having
further found that Respondent NSC 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, U.S. Naval Supply Center, Oakland,
California, shall:
1. Cease and desist from:
(a) Instituting any change in the established policy and
practice of the hand delivery of employee paychecks and savings
bonds on the premises without first notifying the American
Federation of Government Employees, Local 1533, AFL-CIO, the
exclusive representatives of its employees, and affording such
representative 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 the decision announced in the Party
Line publications from December 11, 1982 through January 21, 1983
and unlawfully implemented on January 14, 1983.
(b) Forthwith reinstate the policy and practice of the hand
delivery of paychecks and savings bonds on the premises as it
existed prior to October 1, 1982.
(c) Notify the American Federation of Government Employees,
Local 1533, AFL-CIO any proposed change regarding the hand
delivery of paychecks and savings bonds 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, U.S.
Naval Supply Center, Oakland, California, 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 IX, whose address is: 530 Bush Street, Room
542, San Francisco, California 94108, 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 Complaint predicated upon 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 30, 1983
Washington, D.C.
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 and savings bonds on the
premises without first notifying the American Federation of Government
Employees, Local 1533, 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 announced
in the Party Line publications from December 11, 1982 through January
21, 1983 and which we unlawfully implemented on January 14, 1983. WE
WILL forthwith reinstate the policy and practice of the hand delivery of
payroll checks and savings bonds 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 IX, whose address is: 530
Bush Street, Room 542, San Francisco, California 94108 and whose
telephone number is (415) 556-8106.
--------------- FOOTNOTES$ ---------------
/1/ In view of the disposition herein, it is unnecessary to pass upon
the General Counsel's motion to strike Respondent NSC's exceptions.
/2/ 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(.)
/3/ 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.
/4/ The General Counsel filed a Motion to Strike Respondent's Brief
or alternatively to strike portions of the brief. After careful review,
it is concluded that the Motion should be, and it is, denied. It is
noted, and considered in the determination regarding this Motion that
the General Counsel's brief, mailed on June 7, 1983, was also untimely
received.
/5/ The General Counsel's unopposed Motion to Correct Transcript is
granted.
/6/ In view of the above finding, it is unnecessary to address other
arguments raised on its behalf by the Department of the Navy concerning
its lack of responsibility in the matter. It is also unnecessary to
rule a 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 was an agency-wide
regulation and not a Government-wide rule or regulation.