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The decision of the Authority follows:
25 FLRA No. 69 NATIONAL TREASURY EMPLOYEES UNION Union and DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE Agency Case No. 0-NG-1244 DECISION AND ORDER ON NEGOTIABILITY ISSUES I. Statement of the Case This case is before the Authority because of a negotiability appeal filed under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute) and concerns the negotiability of three proposals. We find all three proposals to be negotiable. II. Proposal 1 The Service shall maintain its current practices of hand-delivering employees' paychecks, earning statements, etc. Proposal 2 Employees may designate any address, including the address of the employees' post-of-duty, (temporary or permanent), for the mail distribution of paychecks, earning statements, etc. Proposal 3 Paychecks received in an IRS office's mail will be distributed immediately if possible. If immediate distribution is not possible, the employees will be informed that: a. Their paychecks have arrived in the mail; b. Distribution is not immediately possible; c. The reason(s) distribution is not immediately possible; and d. Employees desiring to pick up their paychecks, earning statements etc. from the mail room (or any place designated by IRS) will receive administrative time to pick up their paychecks, earning statements, etc. A. Positions of the Parties These proposals were submitted by the Union following the Agency's decision to terminate hand delivery of paychecks and savings bonds to employees. Under the Agency's new policy employees are to choose between direct deposit or mail delivery as their method of paycheck and savings bond delivery. The Agency claims without contravention that the portions of the proposals concerning the hand delivery of leave and earnings statements are not in dispute as these statements continue to be distributed by hand. Agency Statement of Position at 3. As to the requirement for hand delivery of paychecks, the Agency contends that all three proposals interfere with its rights to assign work, under section 7106(a)(2)(B) of the Statute, to determine its internal security practices, under section 7106(a)(1), and to determine its methods and means of performing work, under section 7106(b)(1). The Agency also contends that all three proposals conflict with an Agency-wide regulation for which a compelling need exists under section 7117(a)(2) of the Statute, and that Proposals 2 and 3 do not constitute appropriate arrangements for adversely affected employees, under section 7106(b)(3). The Union states that Proposal 1 is intended to require the Agency to maintain its practice of allowing its employees to receive paychecks by hand-delivery at their official work locations. Proposals 2 and 3 were submitted as interim procedures in the event that Proposal 1 was declared nonnegotiable. The Union contends that paycheck distribution is a working condition, under section 7103(a)(14), and does not fall within any of the statutory exemptions from bargaining under section 7106 of the Statute. It also contends that there is no compelling need for the Agency's regulation and that the proposals, therefore, are not barred from negotiations under section 7117(a)(2). Finally, the Union asserts that in the event the Authority finds that the proposals interfere with management's rights, Proposals 2 and 3 constitute appropriate arrangements for employees adversely affected by the exercise of these rights, under section 7106(b)(3) of the Statute. B. Analysis 1. Assignment of Work and Methods and Means of Performing Work In the Authority's recent Decision and Order on Remand in Federal Employees Metal Trades Council, AFL-CIO and Department of the Navy, Mare Island Naval Shipyard, Vallejo, California, 25 FLRA No. 31 (1986) /1/ we reconsidered and reversed the Authority's prior holding that two proposals concerning paycheck delivery involved the methods and means of performing work and, thus, were negotiable only at the election of the Agency under section 7106(b)(1) of the Statute. In our decision on remand we determined, among other things, that the manner of paycheck delivery did not involve the methods and means of performing work under section 7106(b)(1) but rather, related principally to conditions of employment under section 7103(a)(14). The proposals in this case also concern the manner of paycheck delivery. In addition, the Agency in this case similarly claims that the proposals involve the methods and means of performing work under section 7106(b)(1) because they determine the kind of payroll system the Agency will use. However, based on the reasons fully set forth in Mare Island Naval Shipyard, we conclude that the proposals in this case do not interfere with management's right to determine the method and means of performing work under section 7106(b)(1). We turn now to the Agency's contention that the proposals interfere with its right to assign work under section 7106(a)(2)(B). In support, the Agency claims that these proposals require it to assign specific duties, namely, duties related to the hand delivery of paychecks, which duties are no longer performed since the hand delivery of paychecks was eliminated. Essentially the same argument was raised by the agency in Mare Island Naval Shipyard. In rejecting the agency's claim in that case we noted that under the agency's new paycheck delivery policy some employees would continue to be permitted to have paychecks delivered by hand. Thus, we found that the proposals in that case did not require the agency to assign duties that would not otherwise be assigned. Similarly, in this case, the Agency's regulation contemplates that some employees will continue to have paychecks delivered by hand. Agency Statement of Position at 3. Since the proposals in this case likewise do not require the Agency to assign duties that would not otherwise be assigned they do not interefere with management's right to assign work under section 7106(a)(2)(B) of the Statute. 2. Internal Security Under Section 7106(a)(1) The Agency contends that its policy with respect to hand delivery of paychecks and savings bonds is part of its plan to secure its physical property against internal or external risks. In support, the Agency argues as follows: Checks are like any other property used to satisfy governmental obligations; if a check issued to a payee is lost or stolen without the fault of the payee there is a legal obligation to issue a replacement check; and therefore, the Agency's interest in securing its obligations in the form of negotiable instruments or checks is equivalent to its interest in securing any other governmental property. In our view, these arguments standing alone do not establish the connection between its policy of terminating hand delivery of paychecks and savings bonds and the safeguarding of its property against internal or external risks. For example, the Agency has not established that its obligation to issue a replacement check depends on whether the first check was lost in the mail or stolen from an employee's mailbox or lost or stolen at the employee's worksite. Moreover, as the Union points out, hand delivery of paychecks may actually reduce the obligation of the Agency to have replacement checks issued for those employees who live in areas where mailboxes are frequently vandalized. Union Reply Brief at 6. Thus, we cannot sustain the Agency's contention that the proposals interfere with its right to determine its internal security practices. 3. Compelling Need As to the Agency's compelling need contention, it asserts that a compelling need exists under section 2424.11(a) of the Authority's rules and regulations for a Department of Treasury directive mandating the mailing of paychecks and savings bonds to employees. In support, the Agency refers to two independent studies which it claims demonstrate a saving of over $1.00 per paycheck for a total saving of $297,000 resulting from the elimination of hand delivery of paychecks and an additional saving of $68,000 resulting from the elimination of hand delivery of savings bonds. On the basis of these projected savings the Agency relies on the Authority's decision in 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) where 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 the agency facilities were partially closed. In that case the Authority determined that 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. Essentially the same argument was raised by the agency and rejected by the Authority in Mare Island Naval Shipyard. In rejecting that argument we noted that the holding in Dugway Proving Ground had been reversed in Lexington-Blue Grass Army Depot, Lexington, Kentucky and American Federation of Government Employees, AFL-CIO, Local 894, and 24 FLRA No. 6 (1986). There we stated that effectiveness and efficiency are not to be measured solely in monetary terms. Thus, the Agency's reliance in this case on Dugway Proving Ground is misplaced. Rather, for the reasons more fully provided in Lexington-Blue Grass Army Depot, 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. In addition, we note that the two studies relied upon by the Agency to support its claim that adoption of the disputed proposals would result in a substantial increase in costs do not establish this conclusion. Neither of these studies was limited only to employees in the bargaining unit but rather, involved all employees of the Agency. The Agency has not shown what increased costs could be expected from application of these proposals to bargaining unit employees. Rather, it appears that the claimed increase in costs is based on the assumption that employees will elect to have their paychecks and savings bonds distributed in a manner which entails the most cost. Further, the Agency has made no demonstration that any increased costs, which it hypothesizes are unavoidable, will not be offset in other ways such as by fewer grievances over paychecks lost in the mail or over problems with electronic fund transfers. C. Conclusion Based on the foregoing analysis, Proposals 1, 2 and 3 involve negotiable conditions of employment within the meaning of section 7103(a)(14) of the Statute. Moreover, because they do not interfere with management's rights, it is unnecessary to address the issue of whether Proposals 2 and 3 constitute appropriate arrangements under section 7106(b)(3) of the Statute. III. Order The Agency must upon request (or as otherwise agreed to by the parties) bargain concerning Proposals 1, 2 and 3. /2/ Issued, Washington, D.C. February 20, 1987. /s/ Jerry L. Calhoun, Chairman /s/ Henry B. Frazier III, Member /s/ Jean McKee, Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- (1) This decision was issued after the decision of the U.S. Circuit Court of Appeals for the Ninth Circuit in Federal Employees Metal Trades Council v. Federal Labor Relations Authority, 778 F.2d 1429 (9th Cir. 1985), reversing and remanding, Federal Employees Metal Trades Council, AFL-CIO and Department of the Navy, Mare Island Naval Shipyard, Vallejo, California, 16 FLRA 619 (1984) and American Federation of Government Employees, Local 1533 and Department of the Navy, Navy Commissary Store Region, Oakland and Navy Commissary Store, Alameda, California, 16 FLRA 623 (1984). (2) In finding these proposals to be within the duty to bargain we make no judgment as to their merits.