[ v24 p377 ]
24:0377(41)NG
The decision of the Authority follows:
24 FLRA No. 41
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, AFL-CIO, LOCAL 1897
Union
and
DEPARTMENT OF THE AIR FORCE
EGLIN AIR FORCE BASE, FLORIDA
Agency
Case No. 0-NG-757
DECISION AND ORDER ON NEGOTIABILITY ISSUE
I. Statement of the Case
This case comes before the Authority because of a negotiability
appeal filed under section 7105(a)(2)(D) and (E) of the Federal Service
Labor-Management Relations Statute (the Statute) and presents issues as
to the negotiability of a single Union proposal. We find that the
proposal is negotiable.
II. Union Proposal
. . . that the Eglin and Hurlbut Nonappropriated Fund
Instrumentality (NAFI) absorb up to 75 percent of the cost of
health insurance prior to proposing to prorate any portion of the
additional increase in cost to unit employees. Further, no
increase will be imposed until all obligations under 5 USC 7117
have been fully satisfied.
III. Positions of the Parties
The proposal would require the Agency to pay up to 75 percent of the
premium cost of employee health insurance prior to increasing the amount
currently paid by bargaining unit employees and to fulfill its duty to
bargain with the Union prior to implementing any change in cost of
health insurance premiums for bargaining unit employees. The Agency
contends the proposal is outside the duty to bargain because it does not
concern conditions of employment of bargaining unit employees, affects
employees outside the bargaining unit, interferes with its right under
section 7106(a)(1) of the Statute to determine its budget, and is
inconsistent with an Agency "regulation" for which there is a compelling
need under section 7117(a)(2). The Union disputes the Agency's
contentions.
IV. Analysis and Conclusions (Footnotes appear in the
Appendix to this Decision)
A. Background
1. Establishment of Wages and Fringe Benefits for Federal Employees
In the Federal sector, the wages and fringe benefits of most
employees are established by law. For example, 5 U.S.C. Chapter 53
controls many matters relating to various pay rates and systems. Among
other things, it establishes the General Schedule and Prevailing Rate
pay systems. Chapter 55 of title 5 contains provisions which govern pay
administration including overtime and other premium pay. Chapters 83,
87 and 89 establish programs covering retirement, life insurance and
health insurance, respectively. These laws, however, do not apply
uniformly to all Federal employees. Some Federal agencies and some
types of employees who are covered by the Statute for purposes of
collective bargaining are not covered by one or another of these laws.
For example, the Federal Deposit Insurance Corporation is not subject to
the statutes governing pay rates. Nonappropriated Fund Instrumentality
(NAFI) employees as are involved in this case are not covered by laws
relating to health insurance or retirement. Teachers employed by the
Department of Defense Dependents Schools, whether overseas or at schools
on military installations in the United States, are not subject to
statutes establishing pay rates for most Federal employees but to laws
creating different salary systems. Thus, while wages and fringe
benefits of most Federal employees are established and controlled by
law, there are some exceptions where matters concerning the nature or
amount of the wages and fringe benefits are left to the discretion of
the employing agencies.
2. The Scope of Bargaining under the Statute
a. The Language of the Statute
The Statute provides that the scope of the duty of an agency to
bargain with an exclusive representative of its employees extends to
"conditions of employment," which term is further defined as "personnel
policies, practices and matters affecting working conditions." Section
7103(a)(12) and (14). Excluded from the definition of conditions of
employment are matters: (1) relating to political activities prohibited
under subchapter III of chapter 73 of title 5; (2) relating to the
classification of any position; or (3) to the extent such matters are
specifically provided for by Federal statute. Section 7114(a)(14). The
Statute also excludes from the scope of the duty to bargain proposals
which concern conditions of employment but which are inconsistent with
law and regulation. Section 7117(a). Thus, under the Statute a
proposed matter which is a condition of employment and is not
inconsistent with applicable law or regulation is within the duty to
bargain.
b. Legislative History and Congressional Intent
The legislative history of the Statute supports the conclusion that
Congress intended that matters relating to wages and fringe benefits
were to be treated in the same manner as other conditions of employment.
That is, proposals concerning them were to be within the duty to
bargain under section 7117(a) "to the extent not inconsistent with any
(applicable law, rule or regulation)" and they were to be excepted from
the definition of conditions of employment under section 7103(14)(c) if
they involved matters which were "specifically provided for by Federal
statute." The Report accompanying the House Committee bill (H.R. 11280)
states that ". . . Federal pay will continue to be set in accordance
with the pay provisions of title 5, and fringe benefits, including
retirement, insurance, and leave, will continue to be set by Congress."
1/ In discussing the negotiation of matters relating to overtime, the
House Report states that "(r)ates of overtime pay are not barganinable,
because they are specifically provided for by statute." 2/
When the House Committee bill was debated on the House floor, Members
who supported the bill reaffirmed this interpretation. Congressman
Ford, discussing the scope of the duty to bargain under the bill,
asserted that "no matters that are governed by statute (such as pay,
money-related fringe benefits, retirement, and so forth) could be
altered by negotiated agreement." 3/ Even opponents of the House
Committee bill agreed that the duty to bargain under that bill excluded
wages and fringe benefits because they were established by law. law.
Congressman Collins, in support of his proposed substitute for the House
Committee bill, described the duty to bargain under the Committee bill
as too broach because it only excluded "matter(s) relating to
discrimination, political activities, and those few specifically
prescribed by law -- for example, pay and benefits." 4/ And finally,
Congressman Udall, whose compromise version of H. R. 11280 formed the
basis of the legislation enacted by Congress and signed into law by the
President, stressed that under the "Udall substitute" matters concerning
"wages and hours and retirement and benefits will continue to be
established by law through congressional action." 5/ There are also a
number of statements to the effect that bargaining is not intended with
respect to pay and fringe benefits. While these statements are not
explicitly tied to the existence of other legal provisions governing
those matters, they were made in the context of the general debate on
the bill. 6/ Moreover, these statements must be read within the context
of the specific provision of the Statute itself. The Statute as enacted
established an explicit scope of bargaining along with explicit
exceptions. Nowhere in the Statute is there any language either
excluding the general subject of wages and fringe benefits from the
definition of conditions of employment or otherwise prohibiting
negotiations on such matters in particular.
The only explicit statement regarding the obligation to negotiate
over wages appears at section 704 of the Civil Service Reform Act of
1978 7/ (CSRA). This section authorizes bargaining on wages and
"employment benefits" for certain prevailing rate employees whose wage
rates would otherwise be controlled by the procedures established under
the Prevailing Rate Act of 1972, Pub. L. No. 92-392. Section 704 is
simply an extension and clarification of section 9(b) of the Prevailing
Rate Act, which exempted prevailing rate employees who had previously
negotiated wages and other conditions of employment from the coverage of
that Act. 8/ See Columbia Power Trades Council and United States
Department of Energy, Bonneville Power Administration, 22 FLRA No. 100
(1986). In the absence of that exemption, the wages of those employees
would have been established pursuant to law. Consequently, section 704
by authorizing such bargaining, acts as an exception to the limitation
on bargaining over matters which are specifically provided for by
Federal statute or which are inconsistent with law.
The Statute and its legislative history should be read in light of
the Executive Orders which preceded it. In this regard the Report
accompanying Executive Order 10988 stated that "(t)he employer in most
parts of the Federal government cannot negotiate on pay, hours of work
or most fringe benefits. These are established by law." 9/ This
statement accurately reflected the legal context of Federal employment
as outlined above: most Federal agencies and employees were, as they
continue to be, subject to the laws establishing pay and fringe
benefits, but some are not. 10/ Likewise under Executive Order 11491,
the duty to bargain similarly extended to personnel policies, practices
and matters affecting working conditions "so far as may be appropriate
under applicable laws and regulations." Section 11(a).
Consistent with this principle, only those Federal employees whose
wages and fringe benefits were not established by law could bargain over
them under the Executive Order. For example, in United Federation of
College Teachers, Local 1460 and U.S. Merchant Marine Academy, 1 FLRC
211 (1972), the Federal Labor Relations Council (the Council) ruled in
essence that the pay of the faculty at the Merchant Marine Academy, 1
FLRC 211 (1972), the Federal Labor Relations Council (the Council) ruled
in essence that the pay of the faculty at the Merchant Marine Academy
was not specifically established by law. Rather, the Merchant Marine
Act gave the Secretary of Commerce discretion to set faculty salaries.
The Council held that proposals relating to teacher salary schedules did
not violate those laws and, since they were otherwise negotiable, were
within the agency's duty to bargain. In Overseas Education Association,
Inc. and Department of Defense, Office of Dependents Schools, 6 FLRC 231
(1978), the Council held that proposals prescribing procedures and
formulas to be used in determining teacher compensation were within the
duty to bargain. The Council determined that the Department of Defense
Overseas Teachers Pay and Personnel Practices Act, 73 Stat. 213 (1959),
did not bar negotiation on the proposal. In other cases the Council
held proposals concerning wages and fringe benefits nonnegotiable not
because they were not matters affecting conditions of employment but,
rather, because they were inconsistent with applicable laws and
regulations. For example, in American Federation of Government
Employees, Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136
(1978), the Council held proposals relating to wage rates and retirement
plans nonnegotiable because the agency established that they conflicted
with an agency regulation for which a compelling need existed. Although
this decision is relied upon by the Agency and the dissenting opinion in
this case, we believe such reliance is inapposite. See section B.4. of
this decision. Also, in International Association of Siderographers,
AFL-CIO, Washington Association and Department of the Treasury, Bureau
of Engraving and Printing, 6 FLRC 1157 (1978), the Council held that a
proposal, which established a standard for setting the pay of certain
employees of the Bureau of Engraving and Printing, was nonnegotiable
because it was inconsistent with law.
c. Summary
Congress intended the basic scope of the duty to bargain to be at
least the same under the Statute as it was under the Executive Order.
11/ Under both, the duty to bargain explicitly extends to personnel
policies, practices, and matters affecting the working conditions of
bargaining unit employees. Bargaining over proposals inconsistent with
applicable controlling law or regulation, however, is not permitted.
Under the Executive Order the Council held pay and fringe benefits
proposals to be bargainable to the extent that they concerned matters
which were (1) within the discretion of agencies and (2) not
inconsistent with applicable laws and regulations. These decisions were
a part of the record before the Congress when it enacted the Statute.
Usually when Congress adopts a new law which incorporates provision of
prior law, it is presumed to be aware of administrative interpretation
of that law and to adopt those interpretations. See Lorillard v. Pons,
434 U.S. 575 (1978), see also New York Council, Association of Civilian
Technicians v. FLRA, 757 F.2d 502, 509 (2nd Cir. 1985); Florida
National Guard v. FLRA, 699 F.2d 1082 (11th Cir. 1983). Had Congress
intended that a different approach as to the negotiability of pay and
fringe benefits be applied under the Statute, it could very easily have
incorporated specific language in the Statute to accomplish that effect.
It should be noted that Congress used specific language to except from
the obligation to bargain matters relating to political activities
prohibited under subchapter III of chapter 73 of title 5 and the
classification of positions. Section 7103(a)(14)(A) and (B). However,
it has not incorporated such an exclusion regarding pay, fringe benefits
or any related matters.
We are of the view that the legislative history of the Statute, read
as a whole regarding bargaining over pay and fringe benefits, does not
compel a conclusion that Congress sought to deviate from either
Executive Order practice or from the overall definition of the scope of
the duty to bargain embodied in the Statute. Usually legislative
history is used to clear up ambiguities in statutory language. However,
the fact that a statute has relatively plain meaning should not serve to
thwart or distort the intent of Congress by excluding from consideration
enlightening material from legislative history. Nonetheless the clearer
the statutory language, the more compelling the legislative history must
be to overcome that language. 2A N. Singer, Sutherland Stat. Const.
Section 48.01 (4th Ed. 1984). The more precise statements in the
legislative history, as noted above, specifically tie the prohibition on
bargaining over pay and fringe benefits to the existence of other laws
which govern those subjects. Other more general statements are couched
in terms of assurances that the legislation under consideration does not
represent a radical change or significant expansion in the scope of
Federal section collective bargaining. See, for example, the Clay and
Ford statements quoted at note 6, infra, which appeared at H.R. Rep. No.
95-1403, 95th Cong., 2nd Sess. 377 (1978); Legislative History at 721
and 124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978); Legislative History
at 854-6. Still others, simply state that pay and fringe benefits are
not negotiable. See, note 6, infra, at 2 app.
Even taking the legislative history in a light most favorable to the
Agency's position that pay and fringe benefits are not negotiable, that
history is at best ambiguous. However, the definition of the scope of
bargaining which is embodied in the Statute is perfectly clear. Under
that definition, and consistent with practice under the Executive Order,
substantive proposals regarding pay and fringe benefits which are not
specifically provided for by Federal statute, and any other conditions
of employment are negotiable to the extent they are not inconsistent
with applicable laws, rules and regulations if the matters proposed are
within an agency's discretion. To the extent that Chairman Calhoun's
dissenting opinion implies otherwise, we respectfully disagree.
Ambiguous legislative history does not compel a different conclusion.
See American Federation of Government Employees, Locals 225, 1504, and
3723, AFL-CIO v. FLRA, 712 F.2d 640, 649 (D.C. Cir. 1983); Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 412 n.29 (1971).
While not of controlling significance, of course, as to determining
what is the scope of the duty to bargain under the Statute, we note that
where Congress expressly establishes pay and fringe benefits for Federal
employees, that legislative process is not without its elements of
"negotiation." The setting of wages is accomplished by the same process
as any other piece of legislation. Typically, the President submits a
pay proposal, both the Senate and House of Representatives consider the
proposal, unions and other interested parties lobby, they along with
representatives of the Administration may testify, and a compromise may
have to be reached. Finally, a bill passes, which the President must
act on before the process is completed. So, where Congress does not
expressly establish pay and fringe benefits, some balancing of forces
and interests through negotiations is consistent with that process.
3. Decisions under the Statute
Consistent with this statutory definition of the scope of bargaining,
the Authority has held substantive proposals regarding pay nonnegotiable
if they relate to a matter specifically provided for by Federal law.
For example, American Federation of Government Employees, AFL-CIO,
Council of Federal Grain Inspection Locals and United States Department
of Agriculture, Federal Grain Inspection Service, Washington, D.C., 3
FLRA 530 (1980), aff'd sub nom. American Federation of Government
Employees, AFL-CIO v. Federal Labor Relations Authority, 653 F.2d 669
(D.C. Cir. 1981); National Treasury Employees Union and Pension Benefit
Guaranty Corporation, 9 FLRA 692 (1982), aff'd sub nom. National
Treasury Employees Union v. Federal Labor Relations Authority, 711 F.2d
420 (D.C. Cir. 1983). In other cases, the Authority has held proposals
on wage-related matters negotiable if they do not concern matters
specially provided for by law and are otherwise consistent with
applicable law and regulations. Fort Bragg Unit of North Carolina
Association of Educators, National Education Association and Fort Bragg
Dependents Schools, Fort Bragg, North Carolina, 12 FLRA 519, 521 (1983).
B. Negotiability of the Proposal in This Case
1. The Proposal Does Not Concern Matters Provided for by Law
The Agency states that "premiums for 'health insurance benefits' for
the employees (nonappropriated fund employees) concerned in the instant
case have never been paid pursuant to a Federal statute." Agency
Statement of Position at 9. Nonappropriated fund employees are excluded
from the coverage of Chapter 89 of title 5 of the United States Code,
which governs health insurance plans administered by the Office of
Personnel Management. 12/ Health insurance matters with respect to these
employees are governed by agency regulations. Since the proration of
the cost of premiums for health insurance benefits is not a matter
specifically provided for by Federal statute, this matter is not
excepted from the definition of conditions of employment under section
7103(a)(14)(C) of the Statute.
2. The Proposal Does Not Determine the Conditions of Employment of
Nonunit Employees
The Agency claims that, since Nonappropriated Fund Instrumentalities
(NAFIs) with finite amounts of money are involved herein, the proposal
could affect employees outside the bargaining unit. Thus, according to
the Agency, the proposal would concern matters beyond the conditions of
employment of bargaining unit employees and would be outside its duty to
bargain. The Agency, in essence, is claiming that, if it pays more
toward the cost of health insurance premiums for bargaining unit
employees than it pays for nonbargaining unit employees, the latter
employees will be affected thereby either because they will receive less
toward their health insurance premiums or less towards the cost of some
other employer-provided benefit than they had previously received.
It is well settled that matters which are conditions of employment of
employees in a bargaining unit and are within the discretion of the
agency involved are within the duty to bargain. For example, National
Treasury Employees Union, Chapter 6 and Internal Revenue Service, New
Orleans District, 3 FLRA 748, 759-60 (1980). Proposals which directly
determine, that is prescribe, the conditions of employment of nonunit
employees are outside the duty to bargain. However, otherwise
negotiable proposals which directly determine conditions of employment
of bargaining unit employees are not rendered nonnegotiable simply
because they also affect conditions of employment outside of the
bargaining unit to a limited degree or in an indirect way. American
Federation of Government Employees, Local 32, AFL-CIO and Office of
Personnel Management, 22 FLRA No. 49 (1986), petition for review filed
sub nom. American Federation of Government Employees, Local 32 v.
Federal Labor Relations Authority, No. 86-1447 (D.C. Cir. Aug. 11,
1986).
The Union claims that the proposal does not concern employees outside
of the bargaining units involved and states that it "merely requires the
agency to do something with respect to bargaining unit employees while
allowing the agency to maintain the status quo for employees outside the
unit (.)" Union Reply Brief at 8. The proposal does not prescribe what
the Agency would pay towards the cost of nonbargaining unit employee
benefits or even that it make lesser contributions as opposed to using
other means to finance its increased costs with respect to bargaining
unit employee benefits. Consequently, we cannot conclude that the
proposal directly determines the conditions of employment of nonunit
employees. Based on the principles set forth above, the Agency's
argument does not present a basis for finding the proposal
nonnegotiable.
Moreover, we believe the argument is basically flawed. Much of
collective bargaining entails the distribution of finite resources. The
Agency's argument seems to presume that Congress intended to establish a
system in which the duty to bargain arises only where infinite resources
are available to it. Compare American Federation of Government
Employees v. Federal Labor Relations Authority, 785 F.2d 333, 337-8,
(D.C. Cir. 1986) in which the Court noted that under the Statute an
agency was not released from its duty to bargain whenever it had
suffered economic hardship.
3. The Proposal Does Not Directly Interfere With Management's Right
To Determine Its Budget Under Section 7106(a)(1)
The Agency also contends that since it has decided to pay 46% of the
cost of health insurance premiums for all covered employees, any
increase in the employer's share of bargaining unit employee premium
payments would require adjustments to other budgetary allocations
considering the funding process of NAFIs. Thus, according to the
Agency, the proposal has a direct impact on budgetary items and
interferes with management's right to determine its budget.
We find that the Union's proposal would not directly interfere with
the Agency's right to determine its budget. Under the test set forth 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 sub nom. AFGE v. FLRA, 455 U.S. 945 (1982), we find that the
proposal does not require the Agency to include a particular program or
operation in its budget. Employer contributions to the cost of employee
health insurance premiums are already included in budgets of the NAFIs
at Eglin and Hurlbut Air Force Bases. Agency Statement of Position at
10-14. The proposal does not directly determine the specific amount
which the Agency must allocate to that program. It establishes a
percentage of the total premium cost to be absorbed by the Agency. What
that percentage means in terms of the amount to be budgeted depends on
factors not covered by the proposal, but within the Agency's control,
such as total premium cost and number of employees subject to the health
insurance program. Furthermore, the Agency has not made a substantial
demonstration that the proposal would result in significant and
unavoidable costs which are not offset by compensating benefits. The
Agency claims that implementation of the Union's proposal would
potentially increase the costs of the employer's share of health
insurance premiums. Agency Statement of Position at 11-13. The Agency
does not show, however, that such an increase would be unavoidable or
that it would not be offset by compensating benefits.
4. The Agency Has Not Demonstrated a Conflict Between the Proposal
and Agency Regulations
The Agency argues that a compelling need exists for a uniform,
centrally managed health insurance program. It contends that its
program, including its policy determinations as to the employer
contributions to the premium cost, meets the Authority's criteria for
determining compelling need set forth at 5 CFR Section 2424.11(a). In
its statement of position it provides no specific citation to its rules
and regulations but relies generally on Department of the Air Force and
Department of Defense regulations which set forth personnel policies and
procedures pertaining to NAF instrumentalities and employees. It has
submitted "relevant excerpts" of Air Force Regulations 34-3 and 40-7 as
well as Department of Defense Regulation 1401.1-M.
To establish a compelling need for an agency-wide regulation, an
agency must: (1) identify a specific agency-wide regulation; (2) show
that there is a conflict between its regulation and the proposal; and
(3) demonstrate that its regulation is supported by a compelling need
with reference to the Authority's standards set forth in section 2424.11
of its regulations. Generalized and conclusionary reasoning is not
enough to support a finding of compelling need. American Federation of
Government Employees, AFL-CIO, Local 3804 and Federal Deposit Insurance
Corporation, Madison Region, 21 FLRA No. 104 (1986) (Proposal 7). Here,
the Agency has not even demonstrated that the proposal actually
conflicts with a specific agency-wide regulation. The excerpts of
regulations which it has submitted generally set forth policies,
organization, and practices for the administration and management of
NAFIs and their employees. Among other things, the regulations place
responsibility for policy direction of all Air Force NAFIs with the Air
Force Welfare Board (AFWB) and provide for an Agency-sponsored group
health insurance plan. However, nowhere do the excerpted portions of
the regulations submitted prescribe what percentage of the premium will
be paid by the employer or even that the percentage should be uniform
throughout the Agency NAFI system. Moreover, we do not view local
negotiations over the level of employer contribution to the premium as
inherently inconsistent with the general concept of providing central
management and policy direction in the NAFI system or a uniform program
of health insurance benefits. See American Federation of Government
Employees, AFL-CIO, Local 2670 and Army and Air Force Exchange Service,
Keesler Air Force Base Exchange, Mississippi, 10 FLRA 71, 73-75 (1982).
Therefore, the Agency's assertion that the proposal conflicts with an
agency rule or regulation for which a compelling need exists cannot be
sustained.
The reliance placed by the Agency on the decision of the Federal
Labor Relations Council in American Federation of Government Employees
Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136 (1978) is
inapposite. First of all, in McGuire Air Force Base the Council found
that the agency had established a conflict between the proposals which
were in dispute and the agency's regulations. The Agency has not
established such a conflict in the present case. Moreover, the
proposals which were involved in McGuire Air Force Base are materially
different from the proposal in the present case for the following
reasons.
Proposals I and III in McGuire Air Force Base would have rendered
negotiable the pay of certain categories of NAFI employees. The Council
held that the agency had established that its regulations concerning
employee pay with which the proposal conflicted were essential to
effectuate the "public interest" which, the Council stated, was
"expressly set forth by Congress in Public Law 92-392" which covered
some NAFI employees and had been extended administratively to cover
other NAFI employees, including those to whom the proposals would apply,
"'consistent with (an agency) commitment to Congress' during the
legislative process." In the present case no such public interest,
either Congressionally or otherwise defined, has been established by the
Agency.
Proposal IV in McGuire Air Force Base sought to establish a separate
retirement plan for employees in the bargaining unit in place of the
single plan which existed to cover all NAFI employees in the Air Force.
The agency established that the public interest in a financially
solvent, secure and completely dependable plan for retiring NAFI
employees would not be effectuated by the separate plan which was
proposed. In sharp contrast, the proposal at issue in the present case
does not seek to except the NAFI employees at Eglin Air Force Base from
the central health insurance program which the Agency has established.
Moreover, it has not been shown that the proposal would prevent the
effectuation of the public interest in assuring a dependable health
insurance program for any NAFI employees.
Finally, while not of controlling significance as to determining
whether a matter is within the duty to bargain under the Statute, we
note that for most Federal employees, there is a wide selection of
health plans from which to choose. The choices range from different
benefits to different levels of contribution by both the individual and
the Federal government. These plans have been negotiated with the
providers of the health plans. Through this procedure, these employees
have been given the capability to select the plan which meets their
needs and, most importantly, is within their financial ability to pay.
It would seem that this same capability should be available to other
employees.
V. Summary and Conclusion
The subject of wages and fringe benefits is not in and of itself
excluded from the scope of the duty to bargain as defined by the
Statute. The proposal in this case does not relate to a matter which is
specifically provided for by Federal statute and, therefore, does not
come within the exceptions to the definition of conditions of employment
under section 7103(a)(14)(C) of the Statute. Moreover, the proposal
does not determine the conditions of employment of nonunit employees or
interfere with the Agency's right to determine its budget. Lastly, the
Agency has not established that the proposal conflicts with an agency
rule or regulation for which a compelling need exist. Consequently, we
find that the proposal is within the duty to bargain.
VI. Order
The Agency shall upon request or as otherwise agreed to by the
parties, negotiate over the Union's proposal. 13/
Issued, Washington, D.C., December 9, 1986.
Henry B. Frazier III, Member
Jean McKee, Member
FEDERAL LABOR RELATIONS AUTHORITY
DISSENTING OPINION OF CHAIRMAN CALHOUN
I respectfully disagree with my colleagues. I conclude that the
proposal in this case is not a proper subject of bargaining. I also
disagree with my colleagues in their analysis of the extent to which
wages and money-related fringe benefits (including the determination of
health insurance benefits) are appropriate subjects of collective
bargaining for certain Federal employees beyond this case.
Non-appropriated Fund Instrumentality (NAFI) employees are a unique
group of Federal employees. Although they enjoy the right to organize
and bargain collectively under the Federal Service Labor-Management
Relations Statute (the Statute), they do not serve in the competitive
service and are not subject to a wide range of the statutorily created
benefits (and strictures) shared by most Federal employees. See 5
U.S.C. Section 2105.
In lieu of the statutory and regulatory scheme applied to most
Federal employees, NAFI employment within the Department of Defense is
generally governed by a comprehensive regulatory scheme emanating from
the Secretary of Defense and further implemented world-wide by various
components of the military departments. In my view, this regulatory
scheme equates to the statutory provisions affecting the wages and
monetary fringe benefits of most Federal employees. As such, I conclude
that a compelling need exists for the regulatory scheme, and matters
provided for by those regulations are therefore not a proper subject of
collective bargaining.
Eight years ago the Authority's predecessor organization, the Federal
Labor Relations Council, addressed the efficacy of these very same
regulations. In American Federation of Government Employees, Local 1778
and McGuire Air Force Base, New Jersy, 6 FLRC 136 (1978), the Union
sought to negotiate proposals concerning both the pay and retirement
systems for NAFI employees. The Council found both proposals to be
nonnegotiable because a compelling need existed for the Department of
Defense and Department of the Air Force Regulations setting forth
comprehensive compensation schemes concerning the subject matter of the
proposals. Specifically with respect to the matter of contributions to
the retirement plan, the Council found that the centrally administered
retirement program which provided benefits generally comparable to those
provided Federal Civil Service employees, "effectuates the public
interest" and that "uniformity is essential to the assurance of a
financially solvent and fully reliable retirement program for the NAF
employees here involved." 6 FLRC at 148.
While I recognize that the criteria used to determine compelling need
questions have been modified under Authority regulations, those
modifications do not prevent reaching the same conclusion in the instant
case. It is my view that the regulatory scheme remains "essential, as
distinguished from helpful or desirable, to the accomplishment of the
mission or execution of functions of the agency . . . in a manner which
is consistent with the requirements of an effective and efficient
government." 5 C.F.R. Section 2424.11(a). I find no reason to depart
from the holding and precedent of the Council in McGuire Air Force Base.
See 5 U.S.C. Section 7135. I share the same concerns expressed by the
Council about the need for uniformity of treatment of NAFI employees.
To have such matters negotiable at Eglin Air Force Base and
nonnegotiable at McGuire Air Force Base makes no sense whatsoever.
These concerns lead me to conclude that absent evidence of express
Congressional intent to make wages and monetary fringe benefits a
subject of collective bargaining in the Federal sector the Authority
should not, as a general proposition, find such proposals negotiable.
Although I believe this case can, and should be, resolved on the
basis of compelling need, it is my opinion that extremely important
public policy considerations attach to the Authority's adjudication of a
number of pending cases now before us which involve the negotiability of
bargaining proposals relating to matters of compensation or
monetary-related fringe benefits. These cases require uniform
resolution of issues similar to the one in this case. Therefore I turn
to the question my colleagues raise as to what issues relating to wages
and money-related fringe benefits are in their view appropriate subjects
of collective bargaining.
As described in the majority opinion, the wages and fringe benefits
of most Federal employees are established by law. However, there are in
excess of 40 Federal pay systems which are not subject to statutorily
determined salary and wage schedules. Agency heads have the authority
under these systems to determine the pay of Federal service employees
working within their respective agencies. Many of these compensation
systems have evolved without any apparent recognition, endorsement, or
legislative attention by the Congress.
My colleagues conclude that in every case where there is discretion
involved or when Congress is silent, the matters at issue are
appropriate for collective bargaining. The hypothesis has superficial
appeal. I would, however, go further to recognize that as Members of
the Authority we have an affirmative obligation to look behind such
pronouncements and weigh the interests of the parties, and all related
policy considerations. Sometimes examination of these factors will
indicate a necessity for judicial restraint in the face of Congressional
silence, and a finding to withhold a matter from bargaining. I believe
that is the case here. In the absence of a clear expression of
Congressional intent to make these matters negotiable, the Authority
should not imply such an intent.
The legislative history discussed in the majority opinion is not
conclusive of the matter but does, I believe, lend support to the
general proposition that Congress in enacting the Statute did not intend
wage and monetary fringe benefits to be included in the basic scope of
Federal sector collective bargaining. For example, Congressmen Clay and
Ford, the primary sponsors of the labor management relations bill,
stated in Supplementary comments to the staff report accompanying their
bill:
Those of our colleagues who are concerned that this bill will
significantly expand the collective bargaining rights of Federal
employees need not worry. It does not. Enactment of the
committee approved labor-management title will continue to deny to
Federal employees most of the collective bargaining rights which
their counterparts in the private sector have enjoyed for over 40
years. Among the collective bargaining rights not included in the
bill are:
. . . . . . .
(2) The right to bargaining collectively over pay and
money-related fringe benefits such as retirement benefits and life
and health insurance(.) H.R. REP. NO. 95-1403, 95th Cong., Sess.
377 (1978); Legislative History, at 721.
Congressman Udall, whose substituted version of the Ford-Clay bill
formed the basis for the legislation enacted by Congress, stated:
There is not really any argument in this bill or in this title
about Federal collective bargaining for wages and fringe benefits
and retirement -- the kinds of things that are givin us difficulty
in the Postal Service today. All these major regulations about
wages and hours and retirement and benefits will continue to be
established by law through congressional action. (emphasis
supplied) 124 Cong. Rec. H 9633 (daily ed. Sept. 13, 1978);
Legislative History, at 923.
Congress did not provide specific authorization for negotiation of
pay and fringe benefit matters affecting the wide variety of
administratively determined pay systems which are not a part of the
statutory Federal pay structure. Thus, it is my view that the question
of the negotiability of such matters is not definitively resolved by
resort to the legislative history of the Statute. Absent specific
indication of a Congressional intent to make pay and monetary fringe
benefits a subject of labor-management negotiations, I believe that
strong public policy considerations exist for permitting agencies to
establish unified, consistent systems for determining such matters. To
find such matters generally negotiable would likely result in the
internal balkanization of salaries and benefits within the various pay
systems. This would destroy the uniformity sought by the Congress in
providing specific methodologies for pay setting in administratively
determined systems. I find support for this determination in certain
actions taken by Congress in the past.
When Congress passed the Postal Reorganization Act (PRA), 39 U.S.C.
Sections 101-5605 (1976 & Supp. V 1981), it gave postal employees the
right to bargain over all compensation, benefits and other conditions of
employment. Congress in effect "created a new kind of Federal
employee." /1/ "Postal workers would henceforth be hybrid employees,
with some of the rights and benefits of federal employees and some of
the rights and benefits of private employees, most importantly, the
right to bargain collectively (on compensation issues)." American Postal
Workers Union v. U.S. Postal Service, 707 F.2d 548, 556 (D.C. Cir.
1983). Thus where Congress chose to introduce unrestricted wage and
benefit bargaining into the federal labor relations scheme, it
manifested such an intent by statutory expression which serves to define
the parameters within which such activity would be conducted. /2/
Other variations to the normal Federal pay setting structure are also
evidenced by affirmative Congressional action. When Congress
established the "prevailing rate system," 5 U.S.C. Sections 531-5349,
/3/ and allowed collective bargaining by certain skilled trade and craft
employees on monetary issues, it did not leave the parties to determine
the scope of such negotiations but instead provided clear procedures for
the determination of such matters. Previous Congressional expressions
that collective bargaining by such employees was in the public interest
were specifically carried forward in section 704 of the Civil Service
Reform Act. See, for example, Columbia Power Trades Council and United
States Department of Energy, Bonneville Power Administration, 22 FLRA
No. 100 (1986).
In International Organization of Masters, Mates, and Pilots v. Brown,
698 F.2d 536 (D.C. Cir. 1983), the court, in finding that high ranking
civilian mariners were subject to the "pay cap" provisions of 5 U.S.C.
Section 5373, stated that "Congress wanted the pay cap to cut a wide
swath . . . Congress deliberately and expressly carved out certain
exceptions . . . but did not exempt the mariners." Id. at 542. Absent
indications to the contrary I can only conclude that Congress intended
by its expressions of intent that wages and money-related fringe
benefits be excluded from collective bargaining, to cut the same "wide
swath" when it enacted the Statute.
With the notable exception of prevailing rate employees and postal
workers, I conclude that Congress envisioned that the pay and monetary
benefits of Federal employees covered by the Statute be set in a uniform
manner, whether by statute or administrative action. Congressional
recognition of the need for stability and uniformity among prevailing
rate employees is found in 5 U.S.C. Section 5341, and the Authority has
previously accepted such a finding in determing the existence of a
"compelling need" for agency regulations setting uniform pay systems for
employees not covered by, but serving in positions analogous to, those
covered by the General Schedule. National Treasury Employees Union,
Chapter 207 and Federal Deposit Insurance Corporation, Washington, D.C.,
14 FLRA 598 (1984), decision on remand, 21 FLRA No. 36 (1986).
Jerry L. Calhoun, Chairman
--------------- FOOTNOTES$ ---------------
(1) 116 Cong.Rec. 20,229 (1970) (remarks of Congressman Udall.)
(2) Postal Service labor-management relations are conducted under the
National Labor Relations Act (NLRA), 29 U.S.C. Section 151, et seq. In
enacting the Federal Service Labor-Management Relations Statute,
Congress did not include employees of the Postal Service, or the
Tennessee Valley Authority (an analogous labor relations situation)
within the coverage of the basic Federal section program.
(3) The prevailing rate system provides method by which the pay of
certain craft and skilled employees may be adjusted from time to time so
that their compensation is consistent with that of employees in the
private sector. Such adjustment must be accomplished "consistent with
the public interest." See National Maritime Union of America v. United
States, 682 F.2d 944 (Ct. Cl. 1982).
APPENDIX
1/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 12 (1978);
Legislative History of the Federal Service Labor-Management Relations
Statute, Title VII of the Civil Service Reform Act of 1978 at 682.
(Herein after referred to as "Legislative History.")
2/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 44 (1978);
Legislative History at 690.
3/ See the remarks of Congressman Ford, 124 Cong. Rec. H8468 (daily
ed. Aug. 11, 1987); Legislative History at 855-56.
4/ See the statement of Congressman Collins in support of his
substitute for the House Committee bill:
The House committee bill, on the other hand, broadly defines
scope of bargaining by saying that "conditions of employment"
excludes only matter relating to discrimination, political
activities, and those few specifically prescribed by law -- for
example, pay and benefits.
124 Cong. Rec. H9624 (daily ed. Sept. 13, 1978); Legislative History at
906.
5/ See the remarks of Congressman Udall, 124 Cong. Rec. H9633 (daily
ed. Sept. 13, 1978); Legislative History at 923: "All these major
regulations about wages and hours and retirement and benefits will
continue to be established by law through congressional action."
6/ See, for example, H.R. REP. No. 95-1403, 95th Cong., 2nd Sess. 5
(1978); Legislative History at 681 which states as follows:
Title VII establishes a new program and provides for greater
employee and employee organization participation. However, title
VII does not authorize collective bargaining on substantive issues
of pay and fringe benefits, as is currently permitted in some
agencies, such as the Postal Service, the Tennessee Valley
Authority, and the Bonneville Power Administration.
Congressmen Clay and Ford, the primary sponsors of the
labor-management relations bills previously introduced in Congress,
stated in supplementary comments to the Committee Report as follows:
Those of our colleagues who are concerned that this bill will
significantly expand the collective bargaining rights of Federal
employees need not worry. It does not. Enactment of the
committee approved labor-management title will continue to deny to
Federal employees most of the collective bargaining rights which
their counterparts in private sector have enjoyed for over 40
years. Among the collective bargaining rights not included in the
bill are:
. . . . . . .
(2) The right to bargain collectively over pay and
money-related fring benefits such as retirement benefits and life
and health insurance(.)
H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 377 (1978); Legislative
History at 721.
Congressman Clay and Ford reiterated this position in their comments
supporting H.R. 11280 in the House debate on the bill. In particular,
Congressman Clay states as follows:
I also want to assure my colleagues that there is nothing in this
bill which allows Federal employees . . . to negotiate over pay
and money-related fringe benefits.
124 Cong. Rec. H8466 (daily ed. Aug. 11, 1978); Legislative History at
853. See also the remarks of Congressman Clay at 124 Cong. Rec. E429
(daily ed. Aug. 3, 1978); Legislative History at 839-40.
Congressman Ford stated as follows:
A committee print of title VII was used for markup purposes. That
print was similar to H.R. 9094 (a bill sponsored by Congressmen
Clay and Ford) except that . . . there was no provision for the
negotiation of pay and other major money related fringe benefits.
I have been quite frankly surprised with the rhetoric and
hysteria that has accompanied consideration of title VII. It is
not a radical departure from the present system, but is a small,
incremental step forward.
As the sponsor of H.R. 1589, the Federal Employees Labor
Relation Act of 1977, the predecessor to H.R. 9094, which provided
for the negotiation of pay and fringe benefits; the negotiation
of all agency regulations; and automatic agency shop; and a
limited right to strike (based on Canadian law) -- all of which, I
might emphasize, have been deleted from title VII -- I can assure
Members that expansion in the scope of bargaining in title VII has
been a very modest, incremental step that comes nowhere near the
scope of bargaining that most (s)tates permit for public employees
or that we permit for postal workers.
124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978); Legislative History at
854-6.
For other statements on this subject in the legislative history, see
statement of Congressman Clay, 124 Cong. Rec. E4509 (daily ed. Aug. 10,
1978), Legislative History at 844-845; statement of Congressman Udall,
124 Cong. Rec. H8462-3 (daily ed. Aug. 11, 1978), Legislative History at
850-51; statement of Congressman Derwinski, 124 Cong. Rec. H9639 (daily
ed. Sept. 13, 1978), Legislative Hisotry at 935; statement of
Congressman Ford, 124 Cong. Rec. H9648-51 (daily ed. Sept. 13, 1978),
Legislative History at 952-958; statement of Congressman Rousselot, 124
Cong. Rec. H9651-52 (daily ed. Sept. 13, 1978), Legislative History at
958-959; statement of Congressman Fisher, 124 Cong. Rec. H9668-69
(daily ed. Sept. 13, 1978), Legislative History at 964; Statement of
Senator Sasser, 124 Cong. Rec. S14280-82 (daily ed. Aug. 24, 1978),
Legislative History at 1014-1015.
See also S. REP. NO. 95-969, 95th Cong., 2nd Sess. 12-13 (1978),
Legislative History at 749-750.
7/ Section 704 of the Civil Service Reform Act of 1978 provides as
follows:
Sec. 704. (a) Those terms and conditions of employment and
other employment benefits with respect to Government prevailing
rate employees to whom section 9(b) of Public Law 92-392 applies
which were the subject of negotiation in accordance with
prevailing rates and practices prior to August 19, 1972, shall be
negotiated on and after the date of the enactment of this Act in
accordance with the provisions of section 9(b) of Public Law
92-392 without regard to any provision of chapter 71 of title 5,
United States Code (as amended by this title), to the extent that
any such provision is inconsistent with this paragraph.
(b) The pay and pay practices relating to employees referred to
in paragraph (1) of this subsection shall be negotiated in
accordance with prevailing rates and pay practices without regard
to any provision of --
(A) chapter 71 of title 5, United States Code (as amended by
this title), to the extent that any such provision is inconsistent
with this paragraph;
(B) subchapter IV of chapter 53 and subchapter V of chapter 55
of title 5, United States Code; or
(C) any rule, regulation, decision, or order relating to rates
of pay or pay practices under subchapter IV of chapter 53 or
subchapter V of chapter 55 of title 5, United States Code.
8/ Pub. L. No. 92-392, Section 9(b), provides as follows:
Sec. 9. (b) The amendments made by this Act shall not be
construed to --
(1) abrogate, modify, or otherwise affect in any way the
provisions of any contract in effect on the date of enactment of
this Act pertaining to the wages, the terms and conditions of
employment, and other employment benefits, or any of the foregoing
matters, for Government prevailing rate employees and resulting
from negotiations between Government agencies and organizations of
Government employees;
(2) nullify, curtail, or otherwise impair in any way the right
of any party to such contract to enter into negotiations after the
date of enactment of this Act for the renewal, extension,
modification, or improvement of the provisions of such contract or
for the replacement of such contract with a new contract; or
(3) nullify, change, or otherwise affect in any way after such
date of enactment any agreement, arrangement, or understanding in
effect on such date with respect to the various items of subject
matter of the negotiations on which any such contract in effect on
such date is based or prevent the inclusion of such items of
subject matter in connection with the renegotiation of any such
contract with a new contract, after such date.
9/ See A Policy for Employee-Management Cooperation in the Federal
Service, Report of the President's Task Force on Employee-Management
Relations in the Federal Service (November 30, 1961, Legislative History
at 1177, 1200-01.
The Report stated as follows:
It must be recognized that a major and perhaps controlling
distinction between the type of employee-management relations that
have developed in private industry and those which are possible in
the Federal service is that in the latter neither the employer nor
his employees are free to bargain in the ordinary sense. The
employees cannot strike, nor be represented by an organization
affiliated with a group which asserts the right to strike against
the Government. The employer in most parts of the Federal
Government cannot negotiate on pay, hours of work or most fringe
benefits. These are established by law.
Generally, negotiations may take place on policies in such
areas of employee concern as working conditions, promotion
standards, grievance procedures, safety, transfers, demotions,
reductions in force, and other matters, consistent with merit
system principles. It may be noted that in the public hearings
held by the Task Force the representatives of the major employee
organizations in the Federal Government made it clear that they
are aware of these limitations and are quite content to negotiate
within them.
In this matter as in most others, the Task Force is of the
opinion that each department and agency of the Government should
be left to determine its own practice. As a general rule,
however, it may be said that a negotiable matter must be within
administrative discretion, that is, it must be within the
authority of the manager who is negotiating, and permissible by
applicable laws, executive orders, and Administration and agency
policy. In general, it will be in the area of working conditions
and personnel policies and practices. It should not include
matters concerning an agency's mission, its budget, its
organization and assignment of personnel, or the technology of
performing its work. Major reorganizations or changes in work
methods, while not negotiable themselves, will involve
implementation problems that may be negotiable such as promotion,
demotion and training procedurs.
Specific areas that might be included among subjects for
consultation and collective negotiations include the work
environment, supervisor-employee relations, work shifts and tours
of duty, grievance procedures, career development policies, and
where permitted by law the implementation of policies relative to
rates of pay and job classification. This list is not, of course,
all-inclusive, nor should it be expected that every agency will
feel free to negotiate in all such areas.
10/ To the extent that a matter affecting conditions of employment is
not specifically provided for by law and is not otherwise inconsistent
with law and regulation it is within the agency's discretion. As the
portion of the Report accompanying E.O. 10988 quoted above at note 9,
indicates, such discretion has been subject to bargaining since the
outset of the labor relations program in the Federal Government. The
Federal Labor Relations Council consistently held that otherwise
negotiable matters which were within an agency's discretion were subject
to collective bargaining. See, for example, National Treasury Employees
Union and Department of the Treasury, U.S. Customs Service, Region VII,
5 FLRC 250, 252 (1977). The Authority has similarly interpreted the
Statute. See, for example, National Treasury Employees Union, Chapter 6
and Internal Revenue Service, New Orleans District, 3 FLRA 748, 759-62
(1980). Consistent with this long-standing precedent in the Federal
sector, the Authority has held that where matters relating to wages and
fringe benefits are within an agency's discretion under law and
regulation they are within the duty to bargain. See Section IV.A.3 of
this decision; For Bragg Unit of North Carolina Association of
Educators, National Education Association and Fort Bragg Dependents
Schools, Fort Bragg, North Carolina, 12 FLRA 519 (1983).
11/ See Library of Congress v. Federal Labor Relations Authority, 699
F.2d 1280, 1285-6 (1983), in which the Court in analyzing the
legislative history of the Statute noted that Congress intended the
bargaining obligation to be construed broadly.
12/ 5 U.S.C. Section 2105(c) provides:
Section 2105. Employee
. . . . . . .
(c) An employee paid from nonappropriated funds of the Army and
Air Force Exchange Service, Army and Air Force Motion Picture
Service, Navy Ship's Stores Ashore, Navy exchanges, Marine Corps
exchanges, Coast Guard exchanges, and other instrumentalities of
the United States under the jurisdiction of the armed forces
conducted for the comfort, pleasure, contentment, and mental and
physical improvement of personnel of the armed forces is deemed
not an employee for the purpose of --
(1) laws (other than subchapter IV of chapter 53 and sections
5550 and 7204 of this title) administered by the Office of
Personnel Management; or
(2) subchapter I of chapter 81 and section 7902 of this title.
This subsection does not affect the status of these nonappropriated
funds activities as Federal instrumentalities.
13/ In finding that this proposal is within the duty to bargain, we
make no judgment as to its merits.