UPS and the Teamsters union reached a tentative agreement for a new five-year contract covering 340,000 workers at the nation’s largest package carrier, six days before a threatened strike that threatened to disrupt deliveries across the country.
Union leaders announced the agreement at midday Tuesday, hours after resuming negotiations following a breakdown in talks on July 5. The handshake agreement still needs to be approved by rank-and-file union members at UPS for it to take effect.
“UPS has put $30 billion in new money on the table as a direct result of these negotiations,” Teamsters President Sean O’Brien said in a statement Tuesday. “This contract sets a new standard in the labor movement and raises the bar for all workers.”
UPS CEO Carol Tomé said in a statement: «Together we reached a win-win agreement on the issues that are important to Teamsters leadership, our employees, and to UPS and our customers.» The agreement, she said, «continues to reward full-time and part-time UPS employees with industry-leading wages and benefits, while retaining the flexibility we need to remain competitive, serve our customers, and keep our business strong.»
Norbert Rodriguez, a veteran UPS package truck driver who participated in the company’s last Teamster strike in 1997, celebrated the announcement while delivering packages on his route.
«I’m very happy that O’Brien negotiated such a good contract, because I’ll be honest with you: it’s necessary,» he said.
“The biggest win is finally getting the car with air conditioning,” Rodríguez added, referring to a key provision of the new heat safety measures the two sides agreed to last month. The Teamsters hailed those changes as a breakthrough after years of complaints that working in hot climates has become more dangerous, as climate change fuels periods of record temperatures across the country.
“I work in Arizona. Today it will be 114 degrees,” Rodríguez said. «These conditions are getting tougher.»
While UPS and union leaders had reached agreements on most issues weeks ago, a handful of economic issues remained unresolved when negotiations resumed Tuesday, including pay for part-time drivers. The deadlock, about three weeks before the union threatened to strike, had raised concerns among small business owners who rely on UPS to ship their packages.
UPS workers voted overwhelmingly on June 16 to authorize a strike if an agreement could not be reached before their current contract expires on July 31.
The tentative deal unveiled Tuesday also removes a feature of the current labor agreement that many rank and file members had reviled from the start: a part-time driver class known as «22.4s,» named for the section of the contract that created them.
Disapproval of that two-tier system contributed to UPS workers rejecting the contract negotiated by Teamsters leaders in 2018, but union officials used procedural measures to enforce it anyway. Infighting triggered a leadership shakeup that brought O’Brien to power.
Under the new agreement, 22.4 drivers would be reclassified as regular drivers and would see their wages adjusted accordingly. It will also prevent UPS from requiring drivers to work overtime on their scheduled days off.
The five-year contract agreement also includes what the union called «historic» wage increases. Current full-time and part-time union workers are guaranteed a wage increase of $2.75 per hour this year, the Teamsters said, which equates to an increase of $7.50 per hour for the duration of the contract.
Pay for existing and new part-time workers, which UPS and Teamsters leaders described as the last hurdle for the contract, would increase to at least $21 an hour immediately, advancing to $23 an hour.
Current part-time workers also earned longevity pay increases of up to $1.50 per hour. The wage increases for full-time workers bring their average maximum rate to $49 an hour, the union said.
A work stoppage by UPS drivers would have been the largest single employer strike in US history. a recent forecast by Anderson Economic Group estimated that a 10-day strike would cost the US economy some $7 billion, with workers racking up $1.1 billion in lost wages and UPS seeing $816 million in losses.
The 1997 strike at the company, which lasted 15 days and involved some 185,000 workers, focused on winning better wages and job security. Ultimately, it cost UPS $600 million in revenue, but resulted in gains for employees on both measures.
The rise of e-commerce, accelerated by the pandemic, recast the demands of UPS workers in the latest round of contract negotiations. Now they are sorting and delivering millions more packages: 6.2 billion worldwide in 2022, up from 5.5 billion in 2019. Labor leaders had argued that UPS should use the $13 billion it generated in profits last year to improve pay and working conditions for employees.
Logistics experts had warned that a prolonged strike this time would likely have disrupted far more deliveries than major rivals like FedEx or the US Postal Service could absorb, potentially disrupting the back-to-school shopping season.