U.S. Federal Labor Relations Authority

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United States of America 



In the Matter of







      Case No. 03 FSIP 169     



Local 1657, United Food and Commercial Workers International Union, AFL-CIO (Union), filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under the Federal Service Labor-Management Relations Statute (Statute), 5 U.S.C. § 7119, between it and the Department of the Navy, U.S. Naval Air Station, Pensacola Navy Exchange, Pensacola, Florida (Employer). 

Following an investigation of the request for assistance, the Panel determined that the dispute, which concerns parts of four articles for a successor collective bargaining agreement (CBA), should be resolved through an informal conference with Panel Member Joseph C. Whitaker.  The parties were also informed that if no settlement was reached, Mr. Whitaker would notify the Panel of the status of the dispute, including the parties' final offers and his recommendations for resolving the impasse.  After considering this information, the Panel would take whatever action it deemed appropriate to resolve the impasse, including the issuance of a Decision and Order


At four facilities at or within a 1/2-hour drive of Pensacola, Florida - the Navy Aviation Plaza, the Corry Station Main Mall, Whiting Field, and Saufley Field - the Employer operates mini-malls, dry cleaners, gas stations, fast food establishments, and barber shops.  The Union represents between 527 and 535 employees; the number varies seasonally.  The majority, approximately 350, are non-appropriated fund (NAF) employees at grades NF- 1 through -6; the remaining 200 are crafts and trades employees at grades NA and NS-1 through -7.  Overall, employees work as personalized service workers (barbers, tailors, food service workers, floral designers), automobile mechanics, cashier checkers, store workers, general and operational (support) clerks, warehouse workers, and maintenance workers (plumbers, electricians), etc.1/  The parties' CBA expired on September 21, 2001. 


The parties essentially disagree over: (1) whether the Employer should increase the amount it contributes to employees' dental insurance premiums, and begin contributing a like percentage to employees' long-term disability premiums; (2) the extent to which the value of gift certificates given to employees to redeem at the Exchange should be increased; (3) whether the Legal Assistance Plan (hereinafter, “the Plan”) should be continued; and (4) whether employees' wages and/or bonuses should be increased.2/  


1.  Insurance Premium Contributions

a.  The Employer's Position  

The Employer's proposal is to maintain the status quo with respect to the amount it contributes to dental and long-term disability insurance premiums.3/  Concerning dental benefits, the share of the premium the Employer provides is set by the Department of Defense (DoD), and management has no duty to bargain over the Union's proposal to increase the percentage.4/  On the subject of long-term disability insurance, lower premium rates recently were negotiated with the providers of such insurance which will benefit employees who opt for coverage.  Furthermore, the total benefit package it provides to its employees is 7 percent higher than what private sector competitors offer, so any contributions to long-term disability premiums are unwarranted.  

b.     The Union's Position

The Union proposes that the Employer raise the share it pays toward employees' dental plan premiums from 70 to 75 percent, and begin covering long-term disability plan premiums at the 75 percent level.  Contrary to the Employer's view, the dental plan should not be considered “major medical health insurance,” in part because dental benefits are explained in a separate booklet.  For this reason, the FLRA's decision in Tyndall does not apply to its proposal.  As to long-term disability insurance, since the Employer already has agreed to cover 75 percent of those premiums for unit employees at the Gulfport Naval Exchange, principles of fairness dictate that it should do the same for Exchange employees at Pensacola.  


Having carefully considered the evidence and arguments presented by the parties on the percentage the Employer should contribute toward dental and long-term disability insurance premiums, we conclude that the Employer's proposal should be adopted to resolve this portion of their dispute.5/  In our view, the Union has not provided sufficient evidence to justify its proposal.  Among other things, the total benefits package provided by management exceeds those of comparable private sector employers in the same geographical area, and there is no evidence in the record that the Employer has had difficulty attracting and retaining good employees.  Finally, even if it is true that the Employer currently is funding 75 percent of employees' long-term disability insurance premiums at another location, we are not persuaded that this warrants a change at this Exchange, where the rule has been no such contribution.  

2.  Gift Certificates, Legal Assistance Plan, and Wages  

a.     The Employer's Position 

On these issues, the Employer proposes to increase the value of gift certificates by $50 per year, and to discontinue its subsidization of the Plan.  This amount is roughly equal to the money it is currently expending per employee/associate under the Plan.  As to wages, the Panel should not adopt the Union's proposal for additional wages and bonuses above those already agreed to by the parties in Article XVIII of the successor CBA. 

Although asked a number of times, the Union refuses to provide information to substantiate how many employees use the Plan each year, or what proportion of the Employer's yearly contribution is used by bargaining-unit employees.  Even the offer of an independent audit of the Plan, to be paid for by the Employer, was rejected.  Lacking independent corroboration that contributions to the Plan, which has been in force for 7 years, provide a “discernable benefit to [] associates,” participation should be discontinued.  By transferring those funds directly to employees in the form of enhanced gift certificates, all of the employees in the unit are certain to benefit from the expenditure. 

With respect to annual wage increases, under Article XVIII, the wages and pay adjustments for associates in the pay band program follow the DoD NAF Wage Program, which involves the use of wage surveys “conducted with full participation of Union stewards.” The resulting “[c]omparability increases are designed to keep the pay of Exchange associates competitive with those in the retail trade in the Escambia County area.”  Furthermore, these employees also may receive merit pay increases based on their accomplishments and contributions.  Compensation for craft and trade associates is similarly governed by wage surveys, and they receive step increases based on length of service.  The Union is proposing additional raises that would total approximately $800,000 over the life of the contract.  To support such raises, the Exchange would be required “to increase its sales nearly 7 [percent] annually.”   The Panel should not adopt the proposal because the Union has provided “no economic justification,” nor demonstrated that it is needed to “maintain a competitive employee base.”   

b.     The Union's Position  

     The Union proposes the following wording:  

Article XLVI -- Gift Certificates Section 1.:  $150 1st year, 2nd year, and 3rd year.  Remaining, what is in current contract.  Change 4th year to $175.00. 


Article XLVII B General, Section 3. Legal Assistance Plan:  Union proposal to stay status quo, leave $4.00 rate for next term of contract.


Wages Rates Proposal:  Start rates for all new hires:  1st year $6.15; 2nd year $6.25; 3rd year $6.35; 4th year $6.45.  Across the board for all associates, non-Title V:  1st year .154; 2nd year .204; 3rd year .254; 4th year .254.  Bonus each year for Title II Associates only: $100.00 1st year, 150.00 2nd year; $175.00 3rd year, $200 4th year.


Alternative Proposal:  If the company will drop its demand regarding the Legal Assistance Fund in Article XLVII, Section 3, the Union will drop its Wage Proposal. Also the Union will drop its demand for the additional amount of $25.00 on the gift certificates in Article XLVII section 1 on the 4th year.  

The proposed $25 increase in gift certificates is limited to senior employees who work a minimum of 35 hours and were hired prior to September 1997.  Overall, adding to the amount of employees' gift certificates is a good idea, and benefits the Employer as much as employees.  In this regard, it encourages employees to shop at the Exchange, and “it is almost impossible for the employee to come in and spend only the value of the gift certificate.”   

As to the Plan, it provides a great benefit to employees.  For example, employees receive legal assistance on real estate transactions, wills, bankruptcy, and driving infractions.  The proper emphasis should not be on how often employees avail themselves of such assistance, but on ensuring that they are informed about the benefits offered under the Plan.  The law firm administering the Plan would distribute a package of materials to inform employees of the benefits.  Finally, on the subject of wage rates, the “minimal increases proposed are equal to average pay increases in the local retail industry.”  They would boost employees' morale, and stabilize the workforce.  By retaining current employees, the Employer would realize a savings because it would be spending less on training new hires.  


After carefully reviewing the record developed by the parties on the issues of gift certificates, the Plan, and wages, we are persuaded that the Employer's proposals should serve as the basis for resolving these matters.  Turning first to the dispute over the Plan, the inability to obtain information to substantiate how it may have benefited employees over the 7 years of its existence, including the Union's refusal to accept the Employer's offer to pay for an independent audit, deprives the record of essential data that might otherwise have supported a continuation of the status quo.  Given the lack of factual evidence, we believe it would be punitive to impose on the Employer the obligation to continue participating in the Plan.  In our view, the alternative the Employer offers of increasing gift certificate amounts is preferable because it would give all unit employees an equivalent defined contribution for a tangible benefit.  As to the additional increase to wage rates that the Union proposes, the record is devoid of information suggesting that the wage survey, and the merit and step increases that employees are eligible to receive under Article XVIII of the successor CBA, would provide inadequate compensation levels.  Nor does the record support the conclusion that the Employer is experiencing difficulty retaining employees.  We shall, therefore, order that the Employer's proposals on gift certificates and the Plan be adopted, and that the Union withdraw its proposals on wages. 


Pursuant to the authority vested in it by the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, the Federal Service Impasses Panel, hereby orders the adoption of the following: 

1.  Insurance Premium Contributions  

The parties shall adopt the Employer's proposal. 

2. Gift Certificates, Legal Assistance Plan, and Wages 

The parties shall adopt the Employer's proposal on gift certificates and the Legal Assistance Plan, and the Union shall withdraw its proposal and alternative proposal on wages.  

By direction of the Panel.  

H. Joseph Schimansky  
Executive Director  

April 23, 2004  
Washington, D.C.

1/     Several positions, including barbers and automobile mechanics, are paid on a commission basis.

2/   The positions of the parties and the Panel's rationale regarding Issues 2 through 4 are presented together in what follows because the parties' final offers with respect to them are interrelated.  

3/   In current CBA, Article XLII, Insurance, reads:  

Section 1.  Information concerning associates group life and health benefits as provided by NEXCOM will be made available to all eligible associates as appropriate.  The Navy Exchange Service Command's Basic Life and Health Benefit Plan which currently are available to all regular full-time associates include the following:


a. Basic Life Insurance and Accidental Death and Dismemberment Insurance;

b. Dependent Life Insurance

c. Comprehensive Medical-Dental Plan

d. Short-term Disability Plan

e. Long-term Disability Plan


Section 2.  Regular full-time and regular part-time associates are eligible to participate in the Optional Group Life Insurance Plan.


The Employer currently pays 70 percent of dental premiums, but makes no contribution toward Long-term Disability Plan premiums. 

4/   In this regard, the Employer contends that the Union's proposal to set the Employer's contribution higher than 70 percent, the current percentage covered by DoD for all participating NAF employees, is nonnegotiable under the FLRA's decision in American Federation of Government Employees, Local 3240 and U.S. Department of the Air Force, 325th Support Group, Air Education and Training Command, Tyndall Air Force Base, Florida, 58 FLRA 696, 697 (July 15, 2003) (Tyndall).

5/   In light of our decision on the merits of this issue, it is unnecessary to address the duty-to-bargain question the Employer raises under Tyndall.