[ v19 p52 ]
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.