Office of Administrative Law Judges
WASHINGTON, D.C. 20424-0001
U.S. DEPARTMENT OF THE NAVY,
NAVY EXCHANGE, NAPLES, ITALY
AND U.S. DEPARTMENT OF THE NAVY, NAVY EXCHANGE SERVICE CENTER,
NAPLES, ITALY AND U.S. DEPARTMENT OF THE NAVY, NAVY EXCHANGE,
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL 3712,
Case Nos. CH-CA-60197
Susanne S. Matlin, Esq. For the General Counsel
Robert A. Hochberger, President For the Charging Party
Before: SAMUEL A. CHAITOVITZ Chief Administrative Law Judge
Statement of the Case
This case arose under the Federal Service Labor-Management
Relations Statute, Chapter 71 of Title 5 of the U.S. Code, 5 U.S.C.
§ 7101, et seq. (the Statute).
Based upon unfair labor practice charges filed by the
Charging Party, American Federation of Government Employees, Local
3712, AFL-CIO (the Union), a Consolidated Complaint and Notice of
Hearing was issued by the Regional Director for the Chicago Region
of the Federal Labor Relations Authority. The consolidated
complaint alleges that the Respondents, U.S. Department of the
Navy, Navy Exchange, Naples, Italy (Naples), U.S. Department of the
Navy, Navy Exchange Service Center, Naples, Italy (NESC), and U.S.
Department of the Navy, Navy Exchange, Sigonella, Italy
(Sigonella), violated section 7116(a)(1) and (5) of the Statute by
giving bargaining unit employees bonuses instead of merit pay
increases based on their annual performance ratings commencing in
July 1995, without providing the Union with notice and an
opportunity to negotiate over such change in pay practice.
Respondents deny that a breach of the duty to bargain occurred in
the circumstances of this case.
A hearing was held in Naples, Italy, on May 8-9, 1996, at
which all parties were afforded a full opportunity to be heard, to
examine and cross-examine witnesses, and to introduce evidence. The
General Counsel and the Respondents filed timely post hearing
briefs which have been carefully considered.
Based upon the entire record, including my observation of
the witnesses and their demeanor, I make the following findings of
fact, conclusions and recommendations.
Findings of Fact
The Union, AFGE Local 3712, is the exclusive bargaining
representative for certain non-appropriated fund employees located
at NESC and the Navy Exchanges in Naples and Sigonella. There is no
dispute that the Union was first certified as exclusive
representative of the approximately 150 employees at the Naples
facility sometime before management's decision to adopt a "pay for
performance" plan in 1991. The Union thereafter became the
exclusive representative for the 15-20 employees at NESC in late
1993, and for the 120 employees located at Sigonella in March 1994.
A collective bargaining agreement covering the employees at Naples
and NESC was negotiated and became effective on April 25, 1994, and
a separate agreement containing similar provisions became effective
for the employees at Sigonella on September 23, 1994. Both
agreements were in effect at all times material
A. Respondents' Adoption of a "Pay for
Prior to October 1991, Respondents had no "pay for
performance" plan to reward their employees whose work exceeded
expectations. On October 16, 1991, the Navy Exchange Service
Command Headquarters (NEXCOM)--which sets policy and provides
guidance for all Navy Exchanges world-wide--issued its "Pay
Banding" manual.(2) The manual
announced that a new pilot program was being established which
would place emphasis on employees' job performance in determining
pay raises. As set forth in the manual, employees would be
evaluated each year on their anniversary dates and would receive
merit pay increases according to the following schedule:
"outstanding" employees would receive merit pay increases of
between 6-8%; "very good" employees between 3-5%; and "good" (i.e.,
fully successful) employees between 0-2%. At the end of the manual,
in a section entitled "Performance Awards," which indicated that
existing awards programs (such as Quality Increases and Superior
Accomplishment Recognition Awards) would continue,(3) there was a statement that "[p]erformance
awards may be given to Pay Banding associates in lieu of merit
increases, subject to prior authorization of NEXCOM."
[Emphasis in original.]
The pilot Pay Banding program was implemented for the Respondents' employees in August 1992. At the time of the program's implementation, the Union was not yet the exclusive representative of the employees at NESC or Sigonella, but did represent the employees at Naples. According to Margie S. Hardin, who has been the Personnel Manager for the Respondents since 1989, she prepared and sent a memorandum along with a copy of the Pay Banding manual to the Union approximately 30 days before the program's implementation. Ms. Hardin neither testified concerning the contents of the memorandum nor submitted a copy of the document itself.(4) Rather, she merely testified that the Union did not object to Pay Banding or seek to bargain about any issue surrounding its implementation. By contrast, the Union's president, Robert Hochberger, testified that to his knowledge the Union never had an opportunity to bargain over the implementation of the Pay Banding program.(5)
I conclude that the Union did not receive notice and an
opportunity to bargain before the Pay Banding program was
implemented for the Respondents' employees in August 1992. Thus, I
find it improbable that Ms. Hardin's memorandum to the Union,
embodying proof that the Respondents fulfilled their statutory
bargaining obligations, would have been destroyed after two years,
and at a time when no collective bargaining agreement covering the
affected employees had yet been negotiated. I find it even more
improbable given that another document dating back over four years
was introduced at the hearing by the same witness who claimed to
have routinely destroyed the memorandum in question after two
years. I also found Ms. Hardin's recollection of events occurring
over four years ago somewhat uncertain. For example, she testified
that the Union was given notice of the new Pay Banding program
about 30 days before it was introduced and the employees were given
training concerning how the program would work. Yet she later
acknowledged that the training occurred in May 1992, well before
the program was implemented in August 1992, and thus months before
the Union was supposed to have been given notice of the new pilot
B. Respondents' Administration of Pay Banding Between
August 1992 and July 1995
The record indicates, and the parties stipulated, that from
the inception of the pilot Pay Banding program in August 1992,
until July 1995, the Respondents' employees at all three facilities
who qualified on the basis of their annual performance ratings were
given merit pay increases within the percentage ranges set forth in
the Pay Banding manual.(6) Thus, for
example, Union president Hochberger received a 7% merit pay
increase in March 1993 based on his "outstanding" rating; a 3.5%
merit pay increase in March 1994 for his "very good" rating; and a
3% merit pay increase in March 1995 for again being rated "very
good." No eligible employee at any of the three locations received
a "bonus" or "performance award" in lieu of a merit pay increase
during that period.(7)
The foregoing practice was consistent with a pamphlet
entitled "Pay Banding in the Navy Exchange System," prepared and
distributed by NEXCOM to all affected employees before the Pay
Banding program went into effect. That pamphlet described Pay
Banding as a "pay for performance" system under which covered
non-appropriated fund employees such as those involved in this
proceeding would receive "merit increases" as of the first pay
period after their respective anniversary dates based on the
ratings they achieved in their annual performance reviews. The
amount of their merit increases was stated in terms of percentage
ranges for each possible performance rating. There was no mention
of "bonuses" in connection with the Pay Banding
The Pay Banding practice between August 1992 and July 1995
also was consistent with a provision in the collective bargaining
agreement covering the employees at Naples and NESC which became
effective on April 25, 1994. Thus, Article 8 ("Wages and
Benefits"), Section 3, provides in pertinent part: "The Employer
further agrees to maintain the status quo of the current pay
system, which includes holiday pay, Sunday pay, work performance
review merit increases, and wage rate schedule increases."
[Emphasis added.] As noted above, when the parties negotiated the
foregoing provision, the uniform practice concerning work
performance review merit increases was that eligible employees
would receive merit pay increases, the size of which being
determined (within pre-established percentage ranges) by the
employees' annual performance ratings.
C. Respondents Change the Practice of Awarding Merit Pay
Increases in July 1995
According to the Respondents' witnesses, the practice of
awarding eligible employees a percentage of their pay as merit
increases each year raised labor costs beyond the point where they
could be offset by sales increases. Consequently, the Respondents'
managers discussed with Personnel Manager Hardin the possibility of
requesting from NEXCOM, pursuant to the terms of the 1991 Pay
Banding manual, the authorization to pay bonuses rather than merit
increases to eligible employees. Ms. Hardin made the request on
their behalf and received such authorization from NEXCOM by
memorandum dated May 31, 1995.(9)
Respondents exercised their authorization by granting bonuses to
all employees who became eligible for merit pay increases in or
after July 1995. Thus, if an employee (such as Angelo Pizzo) would
have been given a 6% merit pay increase in November 1995 for having
been rated "outstanding," he received a 6% bonus
instead.(10) As a result, Pizzo and
other similarly situated employees experienced the following
adverse effects: the bonuses were one-time cash payments which did
not increase the employees' hourly pay rates as merit increases
would have; cost-of-living allowances (COLAs) and merit increases
in the future therefore would be lower because they would be
computed as a percentage of a reduced base; similarly, employees'
retirement annuities (calculated in part on their highest three
years' earnings) would be lower; and payments for accrued annual
leave when employees resigned or retired from federal service would
be at lower hourly rates.
Respondents' change in practice from uniformly awarding
merit pay increases to virtually always awarding performance
bonuses as of July 1995 was concededly accomplished without notice
to or bargaining with the Union. As explained by the Respondents'
witnesses, they were advised by the Personnel Manager, Ms. Hardin,
that no notice or bargaining was required because NEXCOM's 1991 Pay
Banding manual always provided the option to award bonuses in lieu
of merit pay increases and, therefore, no change in conditions of
employment occurred when management exercised that option in July
1995. When asked about the contractual provision requiring the
status quo to be maintained for unit employees concerning
performance review merit pay increases, Ms. Hardin acknowledged the
continuing vitality of the provision. However, she claimed that the
status quo was being maintained by the substitution of bonuses for
merit pay increases because the 1991 Pay Banding manual at all
times allowed for that option to be exercised with the prior
authorization of NEXCOM.
Conclusions of Law
A. Respondents Violated the Duty to
1. The applicable law
The parties stipulated that all of the employees involved in
this case are non-appropriated fund employees. As such, their pay
and benefits are not specifically provided for by federal statute
and therefore constitute negotiable conditions of employment under
section 7103(a)(14) of the Statute. See Fort Stewart Schools v.
FLRA, 495 U.S. 641, 648-50 (1990). See also National
Treasury Employees Union and U.S. Department of the Treasury,
Internal Revenue Service, 37 FLRA 147, 151 (1990);
International Association of Machinists, et al. andU.S.
Department of the Treasury, Bureau of Engraving and Printing,
43 FLRA 1202, 1214 (1992); American Federation of Government
Employees, Local 1857 and U.S. Department of the Air Force, Air
Logistics Center, Sacramento, California,36 FLRA 894, 899-901
(1990)(involving pay and fringe benefits of NAFI employees).
By discontinuing the three-year practice of awarding merit
pay increases to all unit employees whose annual performance
ratings entitled them to such awards, and awarding the employees
bonuses instead, the Respondents clearly changed their conditions
of employment as that concept is commonly understood. That is,
substituting bonuses for merit pay increases meant that the
employees' hourly pay rates remained the same and that other
benefits based on such hourly rates--such as COLAs, annual leave
buyouts and retirement annuities--would be diminished accordingly.
Therefore, unless otherwise excused, the Respondents had an
obligation to notify the Union and bargain upon request concerning
their decision to grant bonuses in lieu of merit pay increases to
deserving employees. 92 Bomb Wing, Fairchild Air Force Base,
Spokane, Washington (Fairchild AFB), 50 FLRA 701, 704-05
(1995). It is undisputed that the Respondents implemented the
change in conditions of employment as of July 1995 without
notifying or bargaining with the Union. In these circumstances, the
Respondents violated section 7116(a)(1) and (5) of the Statute
unless their failure to notify and bargain with the Union is
2. Respondents' defenses must be rejected
Respondents assert that no duty to bargain existed with
regard to the substitution of bonuses for merit pay increases in
July 1995 because the Union had been given notice of the Pay
Banding program (which included the option of awarding bonuses)
before its implementation in August 1992 and the Union neither
objected to nor sought to bargain over any aspect of the Pay
Banding manual's subject matter. I reject the Respondents'
assertion for several reasons.
First, I have previously determined, based on credibility
resolutions and other factors, that the Respondents, through Ms.
Hardin, did not properly notify the Union and provide an
opportunity for bargaining over the Pay Banding program. There is
no evidence that such notice was given, and the explanation offered
for the absence of evidence is contradictory and inherently
Second, even if the Respondents had given notice of the Pay
Banding program before they implemented it in August 1992, the
Union was not then certified as the exclusive represen-tative of
the employees located at NESC and Sigonella. Accordingly, whatever
justification such notice to the Union might have afforded the
Respondents with respect to the employees at Naples who were
represented at that time, it provides none at all for the other
employees who never had the opportunity to bargain through their
exclusive representative concerning the establishment of or changes
to the Pay Banding program directly affecting their conditions of
Third, the Pay Banding manual cannot overcome the terms of
the parties' collective bargaining agreement, specifically Article
8, Section 3. That is, the parties negotiated a contract provision
in April 1994--at least 20 months after the Pay Banding program
went into effect--which required management to maintain the status
quo of the current pay system, including "work performance review
merit increases." As the Respondents have stipulated, only merit
pay increases were awarded to unit employees under the Pay Banding
program until July 1995. Accordingly, when the parties negotiated
the status quo provisions of Article 8, Section 3, and agreed to
preserve "work performance review merit increases," they
were reflecting the uniform practice of the Respondents until that
time. Accordingly, I reject the Respondents' reliance on the
Authority's decision in U.S. Department of Health and Human
Services, Social Security Administration, Baltimore, Maryland,
47 FLRA 1004 (1993)(SSA). In SSA, the Authority held
that an agency could refuse to bargain over a matter already
"covered by" the parties' agreement; it did not authorize an agency
to take unilateral action inconsistent with the terms of such
agreement. Rather, in a companion case, Internal Revenue
Service, Washington, D.C., 47 FLRA 1091 (1993), the Authority
made clear that it would interpret a provision of the parties'
negotiated agreement when relied upon as a defense to--or
authorization for--unilateral action taken. Thus, the Respondents
could have prevailed against the General Counsel's allegation that
an unlawful unilateral change in conditions of employment occurred
in July 1995 by showing that Article 8, Section 3 of the parties'
agreement authorized such a change. Unfortunately for the
Respondents, the language of that provision clearly supports the
B. The Appropriate Remedy
Having concluded that the Respondents violated section
7116(a)(1) and (5) of the Statute as alleged in the complaint, I
must next determine what remedy will effectuate the purposes and
policies of the Statute in the circumstances of this case.
The General Counsel has requested a status quo ante
order requiring the Respondents to reinstitute the practice of
granting performance-based merit pay increases to all eligible
employees; a make-whole order under which all employees who
received bonuses in lieu of merit pay increases as of July 1995
would be compensated for the difference between the bonuses they
received and the merit pay increases they should have received; and
the standard orders requiring the Respondents to bargain upon
request and to post appropriate notices to employees.
Respondents contend that, if a violation is found, a
status quo ante remedy should be denied under the criteria
set forth in Federal Correctional Institution, 8 FLRA 604
(1982)(FCI), for determining when such a remedy is
appropriate in a case involving a violation of the duty to bargain
over impact and implementation. They further emphasize that a
requirement to pay the affected employees pursuant to the General
Counsel's request would harm the profitability of Respondents'
I conclude, in agreement with the General Counsel, that a
status quo ante order and a make-whole remedy are
appropriate in this case. As discussed above, the subject matter
involved in this proceeding--whether the Respondents'
non-appropriated fund employees should receive merit pay increases
or bonuses in connection with their annual performance reviews--is
a substantively negotiable condition of employment rather than a
matter to be determined by management subject only to the duty to
bargain over impact and implementation. Accordingly, the FCI
criteria relied upon by the Respondents are inapplicable in this
case. Rather, in cases where, as here, the violation found is a
unilateral change in substantively negotiable conditions of
employment, the Authority customarily grants status quo ante
orders absent special circumstances. As the Authority has
explained, such a remedy is necessary in order to avoid rendering
the bargaining obligation meaningless. That is, if the only
consequence of an agency's unilateral change in a substantively
negotiable condition of employment were an order to bargain
prospectively over the matter, there would be no incentive for that
agency to meet its statutory obligation to provide the exclusive
representative of its employees with notice and an opportunity to
negotiate over the decision itself before any changes were
effectuated. See, e.g., Fairchild AFB, 50 FLRA at 705;
Veterans Administration, West Los Angeles Medical Center, Los
Angeles, California, 23 FLRA 278, 281 (1986).
In the instant case, the only special circumstance raised by
the Respondents, although not identified as such, is that the
status quo ante and make-whole remedies requested by the
General Counsel would harm the Respondents' profitability. Even if
such a financial consequence would occur as a result of issuing the
requested order, which is not altogether clear from the record
evidence,(13) this is not a special
circumstance justifying the denial of status quo ante and
make-whole relief. The Authority has adopted the following approach
suggested in an opinion of the D.C. Circuit, American Federation
of Government Employees v. FLRA, 785 F.2d 333, 337-38 (D.C.
[T]he general argument that budget cuts (coupled with a
claim that some disruption will result from status quo ante
relief) is a legitimate reason for the FLRA to exercise its
discretion to deny status quo ante relief will not be
upheld. If the . . . argument were accepted, it could be
stretched to preclude effective relief in any case where
the employer is motivated by budgetary considerations. But
economic hardship is a fact of life in employment, for the
public sector as well as the private. Such monetary
considerations often necessitate substantial changes. If an
employer was released from its duty to bargain whenever it
had suffered economic hardship, the employer's duty to
bargain would practically be non-existent in a large
proportion of cases. Congress has not established a
collective bargaining system in which the duty to bargain
exists only at the agency's convenience or desire, or only
when the employer is affluent.
See Service Employees International Union, Local 556 and U.S.
Department of the Navy, Navy Exchange, Pearl Harbor, Hawaii, 37
FLRA 320, 334-35 (1990).
The foregoing discussion is not intended to suggest that the
collective bargaining process created by Congress for the federal
service is indifferent to whatever financial hardships the
Respondents may have been experiencing as a result of its Pay
Banding program. If the Respondents truly needed relief from the
cumulative effects of granting employees annual merit pay
increases, there were ways to seek that relief under the Statute.
Thus, the Respondents could have notified the Union of the problems
they were experiencing and, as they belatedly did at the time of
the hearing in this case, initiated negotiations over the matter.
If the parties failed to reach an accord, the matter could be
presented to the Federal Service Impasses Panel (FSIP) by either
party for resolution under section 7119 of the Statute. The
Respondents' need for relief from the merit pay aspects of the Pay
Banding system could have been presented to the FSIP, and the
latter could have ordered the parties to place an appropriate
provision in their agreement. The Respondents were not free to
"correct" the system unilaterally.
Having found that the Respondents violated section 7116(a)(1) and (5) of the Statute, it is recommended that the Authority adopt the following:
Pursuant to section 2423.29 of the Authority's Rules and
Regulations and section 7118 of the Statute, it is hereby ordered
that the U.S. Department of the Navy, Navy Exchange, Naples, Italy;
U.S. Department of the Navy, Navy Exchange Service Center, Naples,
Italy; and U.S. Department of the Navy, Navy Exchange, Sigonella,
1. Cease and desist from:
(a) Failing and refusing to provide the American
Federation of Government Employees, Local 3712, AFL-CIO (the
Union), the exclusive representative of certain of their employees,
with prior notice of intended changes in the conditions of
employment in the bargaining units represented by the Union and,
specifically, any intention to award bonuses in lieu of merit pay
increases in connection with the employees' annual performance
(b) Failing and refusing to bargain with the Union
concerning the decision to award bonuses in lieu of merit pay
increases to unit employees in connection with their annual
(c) In any like or related manner interfering with,
restraining or coercing their employees in the exercise of rights
assured them by the Statute.
2. Take the following affirmative action in order to
effectuate the purposes and policies of the Federal Service
Labor-Management Relations Statute:
(a) Reinstitute the practice which was in effect
prior to July 1995 of awarding merit pay increases rather than
bonuses to bargaining unit employees in connection with their
annual performance reviews, and make whole all such employees for
the difference between the bonuses they received and the merit pay
increases they should have received.
(b) Give the Union notice of any intention to change
the practice of awarding merit pay increases to bargaining unit
employees in connection with their annual performance reviews and,
upon request, bargain in good faith concerning the decision to
effectuate such change.
(c) Post at their respective facilities in Naples
and Sigonella, Italy, copies of the attached Notice on forms to be
furnished by the Federal Labor Relations Authority. Upon receipt of
such forms, they shall be signed by the appropriate Director of
each facility, and shall be posted at that facility and maintained
for 60 consecutive days thereafter, in conspicuous places,
including all bulletin boards and other places where notices to
employees are customarily posted. Reasonable steps shall be taken
to insure that such Notices are not altered, defaced, or covered by
any other material.
(d) Pursuant to section 2423.30 of the
Authority's Rules and Regulations, notify the Regional Director,
Chicago Region, Federal Labor Relations Authority, 55 West Monroe,
Suite 1150, Chicago, Illinois 60603-9729, in writing, within 30
days from the date of this Order, as to what steps have been taken
SAMUEL A. CHAITOVITZ
Chief Administrative Law Judge
Dated: August 20, 1996
NOTICE TO ALL EMPLOYEES
POSTED BY ORDER OF THE
FEDERAL LABOR RELATIONS AUTHORITY
The Federal Labor Relations Authority has found that the U.S.
Department of the Navy, Navy Exchange, Naples, Italy; U.S.
Department of the Navy, Navy Exchange Service Center, Naples,
Italy; and U.S. Department of the Navy, Navy Exchange, Sigonella,
Italy, violated the Federal Service Labor- Management Relations
Statute and has ordered us to post and abide by this notice.
We hereby notify our employees that:
WE WILL NOT fail and refuse to provide the American Federation
of Government Employees, Local 3712, AFL-CIO (the Union), the
exclusive representative of certain of our employees, with prior
notice of intended changes in the conditions of employment in the
bargaining units represented by the Union and, specifically, any
intention to award bonuses in lieu of merit pay increases in
connection with the employees' annual performance reviews.
WE WILL NOT fail and refuse to bargain with the Union concerning
the decision to award bonuses in lieu of merit pay increases to
unit employees in connection with their annual performance
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
WE WILL reinstitute the practice which was in effect prior to
July 1995 of awarding merit pay increases rather than bonuses to
bargaining unit employees in connection with their annual
performance reviews, and make whole all such employees for the
difference between the bonuses they received and the merit pay
increases they should have received.
WE WILL give the Union notice of any intention to change the
practice of awarding merit pay increases to bargaining unit
employees in connection with their annual performance reviews and,
upon request, bargain in good faith concerning the decision to
effectuate such change.
Date: ________________ By: __________________________
This Notice must remain posted for 60 consecutive days from the
date of posting and must not be altered, defaced or covered by any
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, Chicago Region, whose address is: 55 West Monroe, Suite
1150, Chicago, IL 60603-9729, and whose telephone number is: (312)
1. At the time of the hearing, the parties were negotiating a consolidated agreement to cover the employees at all three locations.
2. The Pay Banding program was instituted by NEXCOM in order to aid in recruiting and retaining the best employees; to reward employees performing their jobs at a high level; and to increase management's flexibility to set new employees' starting salaries in the middle of a pay grade rather than always at its initial step.
3. The record evidence indicates that a Quality Increase is a within-grade step increase awarded regardless of the employee's eligibility based on time in grade, and that a SARA is a one-time award bestowed upon an employee for a "special act" of a non-recurring nature.
4. According to Ms. Hardin, a copy
of the memorandum had been placed in her 1991 file, but was
routinely purged after two years elapsed in accordance with general
operating procedures. I note, however, that a training log dated
May 4, 1992, concerning the implementation of the Pay Banding pilot
program was retained for over four years and submitted by Ms.
Hardin as an exhibit at the hearing in this case on May 8, 1996. I
find it implausible that Ms. Hardin would retain a list of
employees who had attended training on the new Pay Banding
program, but would destroy a memorandum notifying the Union of such a major change in their conditions of employment.
5. Hochberger did not become the Union's president until 1993, and therefore would not have been the recipient of
Ms. Hardin's memorandum if it had been sent. Moreover, Hochberger's testimony that he discussed the matter with the Union president at that time--Maria Brissett, who is still employed at Sigonella--is hearsay and not entitled to great weight. However, his testimony along with certain inconsistencies and implausibilities in Ms. Hardin's testimony, persuade me that the Union was not given adequate notice and an opportunity to bargain over the new Pay Banding program.
6. The only exception occurred at Sigonella for a brief period of time from February to May 1995, when unit employees were denied merit pay increases and instead were made subject to the "new" Pay Banding plan which called for bonuses in lieu of merit pay. Through the terms of a settlement agreement that resolved a pending unfair labor practice case, the affected employees were given merit pay increases effective retroactively, and the "old" Pay Banding program was reinstituted for the Sigonella employees.
7. Respondents testified that the terms "performance award" and "bonus" are synonymous and used interchangeably. In view of my ultimate disposition of this consolidated case, I need not determine whether the terms are synonymous.
8. The pamphlet did indicate, however, that the awarding of SARAs (and Quality Increases) would continue unchanged. As described in the pamphlet, SARAs were "cash awards given for outstanding accomplishments in special situations over a limited period." As such, the one-time cash payments given to SARA recipients for special acts were described as what we commonly understand to be "bonuses," although that term was not used.
9. Although the General Counsel contends that the language of NEXCOM's memorandum did not clearly authorize the payment of bonuses, I conclude that it did. Thus, the purpose of the memorandum, as stated in paragraph 1, was "to grant blanket authorization [as requested by the Respondents] for all activities . . . to give performance awards to associates covered by the pay banding 'pilot' program, instead of merit increases." [Emphasis in original.]
10. It appears that one or two unit employees received merit pay increases rather than bonuses after July 1995 for unspecified reasons, but that the almost universal practice was to award bonuses in lieu of merit pay increases as of July 1995.
11. As the Respondents recognize, the attendance of Maria Brissett, the Union's president at the time, at a Pay Banding training session on May 4, 1992, would not satisfy the notice requirement to the Union. Rather, the training log was offered merely for the purpose of demonstrating that the Union was aware that a Pay Banding program was going to be started.
12. Similarly, the Respondents' reliance on Defense Logistics Agency, Defense General Supply Center, Richmond, Virginia,
20 FLRA 512 (1985)(DLA), is misplaced. In DLA, the Authority decided that a union had clearly and unmistakably waived its right to bargain over management's decision to remove certain employees from the flexitime program, where the applicable agreement contained a specific provision that the administration of its terms would be governed by all pre-existing published agency policies and regulations; one such regulation specifically provided for management's discretion in determining which employees should be removed from flexitime; and the union acquiesced on three prior occasions when management exercised that discretion to remove certain unit employees from flexitime. By contrast, the agreement in the instant case does not incorporate all pre-existing agency policies and regulations as limitations on the administration of the agreement's terms and the Union never acquiesced in the substitution of bonuses for merit pay increases because the Respondents never sought to do so prior to July 1995.
13. I note, for example, that the Respondents appeared to experience profits in certain years when the employees received merit pay increases and experienced losses after the practice was discontinued and bonuses were substituted.