[ v25 p465 ]
The decision of the Authority follows:
25 FLRA No. 31 Case No. 0-NG-768 16 FLRA 619 FEDERAL EMPLOYEES METAL TRADES COUNCIL, AFL-CIO Union and DEPARTMENT OF THE NAVY MARE ISLAND NAVAL SHIPYARD VALLEGO, CALIFORNIA Agency Case No. 0-NG-753 16 FLRA 623 AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL 1533 Union and DEPARTMENT OF NAVY NAVY COMMISSARY STORE REGION, OAKLAND, AND NAVY COMMISSARY STORE, ALAMEDA, CALIFORNIA Agency DECISION AND ORDER ON REMAND I. Statement of Cases A. Prior Proceedings On November 30, 1984, the Authority issued its Decisions and Orders on Negotiability Issues in the above-entitled proceedings. In 16 FLRA 619, the Union made the following proposal: (P)ay distribution for new hires be handled in the same manner as for current employees i.e., new hires will have the option of selecting direct mail or hand delivery of their pay. In 16 FLRA 623, the Union made the following proposal: New bargaining unit employees, will not have to accept direct deposit or mail as a condition of employment but will have the same options of current bargaining unit employees. In both cases the Authority concluded that the proposals interfered with the Agency's right to determine its methods and means of performing work, under section 7106(b)(1) of the Statute and, therefore, were outside the duty to bargain. Subsequently, on December 20, 1985, the U. S. Court of Appeals for the Ninth Circuit, in a consolidated decision, reversed the Authority's determinations with respect to these proposals, and remanded the cases for further proceedings before the Authority if the Agency considered that it had other valid reasons for refusing to bargain. Federal Employees Metal Trades Council v. Federal Labor Relations Authority, 778 F.2d 1429 (9th Cir. 1985). As for the reasons advanced by the Union and the Agency in support of their positions, the court stated that "(a)ll these reasons present the sort of questions collective bargaining is intended to resolve." Federal Employees Metal Trades Council v. FLRA, 778 F.2d at 1432. B. The Authority's Prior Determination We take this opportunity to reconsider the authority's previous determination in these cases that the manner in which an agency delivers paychecks to its employees is a method and means of performing work within the meaning of section 7106(b)(1) of the Statute. We conclude that it is not. There may be aspects of the function of paying employees that would fall within the scope of section 7106(b)(1). However, the Agency has not established in these cases the required nexus between furthering the Agency's mission and the limited matter of how paychecks are delivered to employees. In light of the decision of the Ninth Circuit, we conclude that paycheck delivery does not involve the methods and means of performing work within the meaning of section 7106(b)(1) of the Statute. Therefore, we overrule the Authority's previous holding that the manner of paycheck delivery is negotiable only at the election of the Agency, under section 7106(b)(1). To the extent that previous Authority decisions find that the manner of paycheck delivery is a section 7106(b)(1) matter, they are inconsistent with our decision here and will no longer be followed. /1/ However, we emphasize that in reaching this determination, we do not decide broader questions concerning whether and to what extent other matters which further an agency's mission fall within the scope of section 7106(b)(1). Pursuant to the Court's direction, we will now consider the parties' additional contentions concerning the negotiability of the Unions' proposals. II. Positions of the Parties On Remand, the Agency contends that it is under no obligation to bargain over the Unions' proposals for the following reasons: A. The proposals are outside the duty to bargain because they apply to non-bargaining unit employees, and because they concern a matter which is not a substantive condition of employment. B. The proposals are contrary to a policy stated in an Agency-wide regulation for which a compelling need exists. C. The proposals directly interfere with the following management rights under the Statute: 1. The right to determine its budget and its organization, under section 7106(a)(1); 2. The right to assign work and determine the personnel by which the Agency's operations will be conducted, under section 7106(a)(2)(B). 3. The right to assign employees, under section 7106(a)(2)(A). The Unions in these cases essentially state that there is no merit in any of these additional Agency contentions. III. Analysis A. Contentions Concerning Conditions of Employment In Antilles Consolidated Education Association and Antilles Consolidated School System, 22 FLRA No. 23 (1986), the Authority stated that in deciding whether a proposal involves a condition of employment of bargaining unit employees, two basic factors are considered: (1) Whether the matter proposed to be bargained pertains to bargaining unit employees; and (2) The nature and extent of the effect of the matter proposed to be bargained on working conditions of those employees. As to the first factor, the Agency argues that the proposal in Mare Island Naval Shipyard applies to non-bargaining unit employees because it is prospective in nature. That is, because it concerns an option to be given to future employees, it involves non-bargaining unit employees rather than bargaining unit employees. We are unpersuaded by this reasoning. There is no indication in the record that the Union is attempting to negotiate for non-bargaining unit employees, nor do we find that the proposal has this effect. The Agency's contention depends upon the fact that the proposal refers to new hires. In our view, the proposal relates solely to individuals designated for employment in bargaining unit positions, and has relevance specifically to employment in those positions. The proposal becomes operative only after an individual has been employed in a bargaining unit position and thus is entitled to receive pay. See, for example, Overseas Education Association, Inc. and Department of Defense, Office of Dependents Schools, 22 FLRA No. 34 (1986)(Proposal 1), petition for review filed as to other matters sub nom. Overseas Education Association, Inc. v. FLRA, No. 86-1491 (D.C. Cir., September 3, 1986); see also National Treasury Employees Union and Internal Revenue Service, 7 FLRA 275 (1981)(Proposals 2-4). Consequently, we conclude that the matter proposed to be bargained pertains to bargaining unit employees under the first factor stated in Antilles Consolidated School System. Turning to the second factor, the Agency argues that the proposals do not concern a substantive condition of employment because they merely concern procedures, that is, the manner in which pay will be delivered to employees. It also argues that the proposals do not concern a substantive condition of employment because, insofar as the proposals pertain to only newly hired employees, the impact of the elimination of the hand-delivery option on the bargaining unit is no more than de minimis. See Agency Statement of Position at page 7. We find that the proposals relate principally to matters affecting working conditions of bargaining unit employees. We find no merit in the Agency's argument that because the proposals merely concern procedures, that is, the manner in which pay will be delivered to employees, they do not directly affect working conditions. Under section 7103(a)(14), a condition of employment is defined as a personnel policy, practice or matter affecting working conditions. In our view, the manner of paycheck delivery clearly falls within this definition. The receiving of paychecks is the culmination of the employment contract between the employee and the employer. It consummates an agreement to exchange compensation for work performed, and therefore, it is inextricably bound to a fundamental condition of employment: pay. Without the option of hand-delivery provided by these proposals, employees must have their pay mailed to a designated address other than the worksite or deposited directly into a bank account. The elimination of this option directly affects such employee concerns as where and how quickly pay will be received. Because there is a direct connection between these proposals and the work situation of bargaining unit employees, the manner of paycheck delivery is also a condition of employment under the second factor stated in Antilles Consolidated School System. In addition, the Agency's claim that these proposals only will have a de minimus effect on conditions of employment of bargaining unit employees cannot be sustained. Questions concerning the Agency's duty to bargain in the circumstances of this case are not appropriate for resolution in a negotiability appeal but should be resolved in an unfair labor practice proceeding. See American Federation of Government Employees, AFL-CIO, Local 2736 and Department of the Air Force, Headquarters 379th Combat Support Group (SAC), Wurtsmith Air Force Base, Michigan, 14 FLRA 302, at 306 n.6 (1984). B. Contentions Concerning Compelling Need for an Agency Regulation The Agency contends that the Unions' proposals are inconsistent with an Agency-wide regulation, SECNAV INSTRUCTION 7200.17, for which there is a compelling need. The Agency asserts that a compelling need exists under the criterion set forth at section 2424.11(a) of the Authority's Rules and Regulations. This criterion requires an agency to demonstrate that the rule or regulation for which a compelling need is asserted is essential, as distinguished from helpful or desirable, to the accomplishment of the mission or the execution of functions of the agency in a manner which is consistent with the requirements of an effective and efficient Government. American Federation of Government Employees, AFL-CIO, Local 1928 and Department of the Navy, Naval Air Development Center, Warminster, Pennsylvania, 2 FLRA 451, 454 (1980). For the following reasons we conclude that the Agency has failed to demonstrate a compelling need for its regulation so as to bar negotiation on the Unions' proposals. The Agency states that this case is analogous in all relevant aspects to National Association of Government Employees, Local R14-62 and U.S. Army Dugway Proving Ground, Dugway, Utah, 18 FLRA No. 38 (1985), remanded sub nom. National Association of Government Employees, Local R14-62 v. FLRA, No. 85-2098 (10th Cir., Order November 19, 1986). In that case the Authority found a compelling need under section 2424.11(a) for an agency-wide regulation requiring employees to take annual leave during periods when agency facilities were partially closed. The Authority determined the agency had demonstrated that its regulation was a critical component of the agency's achieving its objective of saving money by curtailing operations so as to insure the agency's performance of its mission in an effective and efficient manner. In support of its contention that a compelling need exists for the regulation in this case, the Agency relies on a study conducted at one Navy payroll office which compared the costs of hand delivery of pay checks to 60% of Navy civilian employees (who at that time received their checks by hand delivery) against the costs of mailing pay checks to those same employees. According to the Agency, this study projected the costs Navy-wide for all Navy employees and indicated that mail delivery would result in a $4 million saving over hand delivery. In Lexington-Blue Grass Army Depot, Lexington, Kentucky and American Federation of Government Employees, AFL-CIO, Local 894, 24 FLRA No. 6 (1986), we reconsidered and overruled the Authority's holding in Dugway Proving Ground. There we stated that effectiveness and efficiency are not to be measured solely in monetary terms. While financial considerations can be relevant to a determination whether an agency regulation satisfies the compelling need criterion set forth in section 2424.11(a) of the Authority's regulations, a broad balancing of factors is appropriate in evaluating such compelling need assertions. In enacting the Statute, Congress found that collective bargaining in the Federal sector is in the public interest because, among other things, it facilitates and improves employees' performance and the efficient accomplishment of the operations of the Government. See section 7101(a) of the Statute. We agree with the Agency that this case is analogous in all relevant aspects to those in Dugway Proving Ground. Specifically, the Agency in this case, like the agency in Dugway Proving Ground, claims that the purpose of its regulation is to save money and that negotiation of the disputed matters would result in an increase in costs which are unavoidable. For the reasons more fully provided in Lexington-Blue Grass Army Depot, therefore, the Agency's contention that there is a compelling need for its regulation, under section 2424.11(a) of the Authority's regulations, cannot be sustained. Moreover, we note that the evidence the Agency provides to support its claim of monetary savings does not establish this conclusion. The claimed monetary saving is based entirely on the assumption that all 60% of Navy employees who, at the time of the study had paychecks hand delivered would elect to have their paychecks distributed in a manner which entailed the most cost. The Agency has not established what increased costs could be expected as a result of the application of these proposals to newly hired bargaining unit employees. In addition, the Agency has made no demonstration that any increased costs, which it hypothesizes, are unavoidable and will not be offset in other ways (for example, by fewer grievances over paychecks lost in the mail or over problems with electronic fund transfers). C. Contentions Concerning the Effect of the Proposals on Management's Rights We find that the Agency has failed to establish that the Union's proposals directly interfere with any of its management's rights under the Statute. 1. Budget and Organization Under Section 7106(a)(1) In American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604 (1980), enforced as to other matters sub nom. Department of Defense v. Federal Labor Relations Authority, 659 F. 2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982), the Authority held that in order to demonstrate that a union proposal directly interferes with management's right to determine its budget it is necessary for an agency either to show that a proposal prescribes programs and operations to be included in the agency's budget or the amount to be allocated for them, or to make a substantial demonstration that the anticipated increase in costs is significant and unavoidable and not offset by compensating benefits. In this case it is clear from the record that the proposals do not prescribe programs or operations to be included in the Agency's budget or the amount to be allocated for them. That is, the payroll function will be maintained by the Agency no matter how paychecks are distributed. Therefore, under the first part of the Wright-Patterson test, the proposals do not directly interfere with the Agency's right to determine its budget. As to the second part of that test, the Agency relies upon the same evidence it submitted in its original statements of position in the cases at issue and as support for its compelling need claim. As noted previously in connection with the Agency's compelling need argument, we find that the Agency has failed to adequately support its claim of monetary savings. Further, the Agency has not demonstrated that the implementation of the Unions' proposals would result in a significant and unavoidable increase in costs which are not outweighed by compensating benefits. The Agency states, in support of its contention that the proposals interfere with its right to determine its organization, that they would require it to maintain an organizational structure capable of effecting hand delivery of paychecks to new employees. The Authority found in American Federation of Government Employees, AFL-CIO, National Immigration and Naturalization Service Council and U.S. Department of Justice, Immigration and Naturalization Service, 8 FLRA 347, 353 (1982) (Proposal 3), reversed as to other matters sub nom. Department of Justice v. FLRA, 709 F.2d 724 (D.C. Cir. 1983), that the term "organization" generally refers to the administrative and functional structure of an enterprise, institution, and the like, including the relationships of personnel through lines of authority and responsibility with delegated and assigned duties. The proposals here, like the proposal in that case, are not directly concerned with or integrally related to any of these matters. We note in this regard that SECNAV INSTRUCTION 7200.17 authorizes the granting of individual exceptions for the mailing of pay and leave and earnings statements to an employee's work address. Thus, the Agency's present organizational structure contemplates that hand delivery of paychecks to some employees will be provided in accordance with the flexible policy in the regulation. Therefore, the proposals would not require the creation of any additional organizational structure. The fact that the Agency's regulation provides for such exceptions also shows that the Agency's argument that the proposals preclude it from changing its organizational structure is purely speculative. Accordingly, the Agency's contention that the proposals interfere with its right to determine its organization is without merit. 2. Right to Assign Work and Determine Personnel The Agency contends that the proposals would require it to assign particular work to certain employees. It also contends that they would require certain Agency employees to perform duties which would not otherwise be assigned to them, prohibit the Agency from determining the duration of work assignments, and impermissibly limit the Agency's discretion regarding to whom the work of delivering pay will be assigned. However, the proposals are not directly or integrally related to the assignment of work but instead would allow new bargaining unit employees to receive their paychecks at the worksite. In addition, and as previously noted, SECNAV INSTRUCTION 7200. 17 authorizes the granting of individual exceptions for the mailing of pay and leave and earning statements to an employee's work address. Thus, the Agency's present policy on paycheck delivery contemplates that duties related to the hand delivery of paychecks to the worksite will continue to be assigned to Agency personnel. These proposals would not conflict with management's right to decide how hand delivery of paychecks will be effectuated and by whom. The Agency's argument that the proposals would prevent it from determining the personnel by which its operations are conducted by denying the Agency the choice of utilizing personnel outside the Agency is also without merit. Once again, the proposals are not directly or integrally related to determinations as to the personnel by which the Agency's operations are to be conducted. 3. Right to Assign Employees The Agency also contends that the proposals violate its right to assign employees under section 7106(a)(2)(A) of the Statute. The Agency does not elaborate further. The Authority rejects this Agency contention for the same reasons that we rejected its contention that the proposals interfere with its right to assign work under section 7106(a)(2)(B). IV. Conclusion For the reasons and cases cited in the foregoing analysis, we conclude that the Unions' proposals are within the duty to bargain. /2/ V. Order The Agency must upon request (or as otherwise agreed to by the parties) bargain concerning the Unions' Proposals. Issued, Washington, D.C., February 2, 1987. /s/ Jerry L. Calhoun, Chairman /s/ Henry B. Frazier III, Member /s/ Jean McKee, Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- (1) For the cases which relied on the original Mare Island Naval Shipyard decision, see the Appendix to this decision. (2) In finding the Unions' Proposals to be within the duty to bargain we make no judgment as to their merits. APPENDIX To the extent that the following decisions find that the manner of paycheck delivery is a section 7106(b)(1) matter, they are inconsistent with our decision here and they will no longer be followed: American Federation of Government Employees, AFL-CIO, Local 1409 and U.S. Army Adjutant General Publications Center, Baltimore, Maryland, 18 FLRA No. 68 (1985); Department of the Navy, Washington, D.C., 18 FLRA No. 76 (1985); Department of Defense, Department of the Navy, Naval Public Works Center, Norfolk, Virginia, 18 FLRA No. 79 (1985); Department of the Navy, Office of the Secretary, Washington, D.C., and Department of the Navy, Naval Underwater Systems Center, Newport, Rhode Island, 18 FLRA No. 98 (1985); Department of Transportation, 19 FLRA No. 1 (1985), remanded sub nom. American Federation of Government Employees, Local 2747 v. FLRA, No. 85-1561 (D.C. Cir. Order, August 18, 1986); Department of the Navy, Washington, D.C., 19 FLRA No. 7 (1985), remanded sub nom. American Federation of Government Employees, Local 1533 v. FLRA, No. 85-7495 (9th Cir. Order December 3, 1986); Department of Defense, Department of the Navy, Washington, D.C., 20 FLRA No. 13 (1985); National Association of Government Employees, Locals R4-1, R4-97 and R4-103 and Department of the Navy, Naval Weapons Station, Yorkstown, Virginia, 20 FLRA No. 24 (1985); United States Department of Defense, Department of the Army, McAlester Army Ammunition Plant and American Federation of Government Employees, Local 2815, AFL-CIO, 20 FLRA No. 73 (1985), remanded sub nom. American Federation of Government Employees, Local 2815 v. FLRA, No. 86-1004 (D.C. Cir. Order, August 13, 1986); Tidewater Virginia Federal Employees Metal Trades Council, AFL-CIO and Navy Public Works Center, Norfolk, Virginia, 20 FLRA No. 97 (1985).