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The decision of the Authority follows:
37 FLRA No. 7
FEDERAL LABOR RELATIONS AUTHORITY
NATIONAL FEDERATION OF FEDERAL EMPLOYEES
U.S. DEPARTMENT OF THE ARMY
ARMY ENGINEER CENTER AND FORT LEONARD WOOD
FORT LEONARD WOOD, MISSOURI
DECISION ON NEGOTIABILITY ISSUE
September 7, 1990
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). The case concerns management's decision to eliminate the employees' option of having their Leave and Earnings Statements (LES's) mailed home or to another designated address. The Agency determined that the distribution of LES's would be accomplished solely through worksite deliveries. The Union's proposal would continue the previous practice under which employees had the option of mail or worksite delivery of their LES's. We find that the proposal is negotiable under the Statute.
The Agency notified the Union that it intended to eliminate the mailing of all Leave and Earnings Statements. The Union took the position that the method of distributing LES's should remain unchanged so that employees would continue to have the option of receiving LES's either at home or work. In its petition for review, the Union contended that the matter was negotiable and that employees should have "the right to determine whether they want to receive their Leave and Earnings Statements at their worksite or have them mailed to their mailing ad[d]resses as has been done for many years." In its response to the Agency's statement of position, the Union clarified its position by setting out more clearly its proposal:
Employees in the bargaining unit may receive their leave and earnings statement (LES) at the worksite or have them mailed to a designated mailing address, at the employees' option.
A. Positions of the Parties
Although the Agency acknowledges that it "is clear . . . that the [U]nion wants employees to maintain the option of having their LES['s] mailed to their homes[,]" the Agency contends that the Union's petition should be dismissed because it does not include the express language of a proposal as required by section 2424.4(a)(1) of the Authority's Rules and Regulations. Agency's Statement at 1. The Agency also contends that the Union's petition does not concern a condition of employment and interferes with management's right to determine its budget under section 7106(a)(1) of the Statute.
The Agency claims that the effect of its proposed change on "bargaining unit employees is trivial and has nothing to do with their working conditions." Id. The Agency argues that the receipt or nonreceipt of LES's does not affect employees' salary or the timeliness of the paycheck, but provides only a record of pay disbursement, leave accumulation and usage. Id. The Agency also contends that the distribution of LES's is distinguishable from the distribution of paychecks, a matter that was found to be a condition of employment by the Authority in Federal Employees Metal Trades Council, AFL-CIO and Department of the Navy, Mare Island Naval Shipyard, Vallejo, California, 25 FLRA 465 (1986) (Mare Island Naval Shipyard). The Agency argues that whereas the delivery of paychecks in Mare Island Naval Shipyard concerned the actual paying of employees, the distribution of LES's concerns simply the delivery of the receipts that record only the benefits that the employee has already received. Id. at 3. The Agency asserts that the receipt of LES's does not provide employees with any benefits and does not affect the employees' working conditions. Id. at 3, 4.
The Agency contends that the Union's petition interferes with management's right to determine its budget under section 7106(a)(1) of the Statute. The Agency argues that if all bargaining unit employees elected to have their LES's mailed, the mailing would dictate a specific dollar amount ($8,288.28 annually) to be allocated in the Agency's budget. The Agency argues that the Union's petition is nonnegotiable because the mailing of LES's causes a significant and unavoidable increase in costs which cannot be offset by compensating benefits. Id. at 4, 5. Also, the Agency asserts that any mailing expense of LES's is excessive and unnecessary. Id. at 5.
The Union states that the purpose of its proposal is "to retain the current practice of employees choosing where they will receive their leave and earnings statements." Union's Response to Agency's Statement at 2. The Union argues that the delivery of LES's concerns a condition of employment because the LES provides information on matters that are related to the employment contract, such as benefits and pay. Id. at 3. Further, the Union contends that employees rely on their LES's in making decisions on leave and in balancing checkbooks, especially if they have worked overtime and have their checks directly deposited or deposited by electronic funds transfer. Id. The Union argues that the LES's are a condition of employment because they intrinsically relate to employees' pay and leave. Id.
The Union argues that the proposal does not interfere with the Agency's right to determine its budget because the proposal does not change the current existing procedure or costs. Id. at 4. The Union contends that although there could be occasional changes in costs associated with an employee's election to change the delivery option, these changes would not significantly increase costs. The Union further argues that even if its proposal is considered a change, the Agency has not made a showing of any impact.
The Union contends that proposals relating to the delivery of LES's are similar to those dealing with the manner in which W-2 forms are to be delivered to unit employees and that such a proposal was found to be negotiable in Department of Health and Human Services and Social Security Administration, 30 FLRA 922 (1988) (Social Security Administration). The Union argues that because LES's are similar to W-2 forms, the manner in which they are delivered is negotiable as well.
B. Analysis and Conclusions
1. The Petition For Review Is Not Deficient
We reject the Agency's contention that the Union's petition for review should be dismissed under section 2424.4(a)(1) of our Rules and Regulations for failure to include the express language of a proposal to be negotiated. We find, based on the record before us, that the Union clearly indicated that it wanted to negotiate the continuation of the Agency's current practice of giving employees the option of receiving their LES's at home. Agency's Statement at 1. The Union reiterated its position and set forth precise language in its response to the Agency's statement.
Based on the Union's stated intention to negotiate on keeping the current practice of giving employees the option of having LES's delivered at work or mailed home, and on the record as a whole, we find that the Union's petition for review complies with the Authority's regulations and that the matter in dispute in this case is sufficiently specific to enable us to make a negotiability determination. See, for example, National Federation of Federal Employees, Local 15 and U.S. Army Armament Munitions and Chemical Command, Rock Island Arsenal, Rock Island, Illinois, 30 FLRA 472, 474 (1987).
2. The Proposal Concerns a Condition of Employment of Bargaining Unit Employees
We find no merit in the Agency's argument that the proposal does not pertain to conditions of employment of bargaining unit employees. In Social Security Administration, U.S. Department of the Treasury, 27 FLRA 919 (1987) and Mare Island Naval Shipyard, the Authority determined that proposals concerning the delivery of paychecks and other "payroll products," including W-2 statements, were matters inextricably tied to pay, a fundamental condition of employment. The W-2 statements represented the annual "record" of the compensation which flows from the employment relationship between the employee and the employer. Consistent with these decisions, we find that LES's, like W-2 statements, are "payroll products" and provide a record of pay disbursement, leave accumulation and usage on a biweekly basis. We note in this connection that employees who have their checks electronically transferred may not be aware of the amount of their deposit until they receive their LES's. Therefore, we find that LES's, like W-2 statements, are "inextricably bound" to employee compensation and, like the paychecks which they record, the manner in which they are delivered is a matter affecting conditions of employment within the meaning of the Statute.
3. The Agency Has Not Established That the Proposal Interferes with Its Right to Determine Its Budget 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, 606-08 (1980) (Wright-Patterson), aff'd as to other matters sub nom. Department of Defense, Army Exchange Service v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982), the Authority established two separate tests for determining whether a proposal conflicts with an agency's right to determine its budget. The Authority held that in order to establish that a union proposal directly interferes with management's right to determine its budget, an agency must either: (1) demonstrate that the proposal prescribes the particular programs or operations the agency would include in its budget or prescribes the amount to be allocated in the budget for them; or (2) demonstrate substantially that the proposal entails an increase in costs that is significant and unavoidable and is not offset by compensating benefits. See Fort Stewart Schools v. FLRA, 110 S. Ct. 2043, 2049 (1990).
It is clear from the record that the proposal does not prescribe programs or operations to be included in the Agency's budget or the amount to be allocated for them. The proposal leaves to the Agency the judgment as to how the proposal will be accommodated in the budget. Consequently, the proposal does not interfere with management's right to determine its budget under the first budget test.
As to the second test set forth in Wright-Patterson, the Agency has failed to demonstrate that compliance with the proposal would result in a significant and unavoidable increase in costs. Even if the Agency has implemented the change to worksite distribution, the Agency has provided no evidence demonstrating that affording employees the option of having their LES's distributed by mail would result in a significant and unavoidable increase in costs over the costs of worksite distribution. We note, in this connection, that the Agency has not provided an estimate of the cost in manhours for the distribution of LES's at the worksite as opposed to the cost of mailing LES's. Therefore, even assuming that the second test has continued viability (see American Federation of Government Employees, Local 1857 and Department of the Air Force, McClellan Air Force Base, California, 36 FLRA No. 85 (1990), slip op. at 9 n.4), we find that the Agency has not demonstrated that the implementation of the Union's proposal would result in a significant and unavoidable increase in costs which are not outweighed by compensating benefits.
Accordingly, we conclude that the proposal does not conflict with the Agency's right to determine its budget under section 7106(a)(1) of the Statute.
The Agency shall upon request, or as otherwise agreed to by the parties, negotiate concerning the proposal.(*)
(If blank, the decision does not have footnotes.)
*/ In finding that this proposal is negotiable, we make no judgment as to its merits.