UPS is offering full-time U.S. union delivery drivers a voluntary buyout in a move that the Teamsters says violates the national contract both parties agreed upon in 2023.
The buyout comes as the logistics giant is undergoing a $3 billion cost-savings plan through 2028, already committing to laying off 20,000 employees this year. Those job cuts are accompanied by a heavier focus on automation within the company’s warehouses.
The financial package available through the program is in addition to any earned retirement benefits, including pension and healthcare.
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UPS did not release any further details on the program, but the Teamsters said in its own statement that the voluntary service plan would offer cash to drivers to initiate early retirement or quit their job. The union’s statement anticipates the official announcement to be announced to workers in “the coming weeks,” claiming that it would leave most drivers without quality health insurance if they retire under the program.
According to the union, the proposed cash offers would be “far less” than what rank-and-file Teamsters now earn and could continue to make over the life of the current five-year agreement ratified in August 2023.
Although UPS said in a statement that it has approached the Teamsters on the topic and remains committed to the 2023 agreement, the union’s boisterous president sees the situation differently.
“UPS is trying to weasel its way out of creating good union jobs here in America by dangling insulting buyouts in front of Teamsters drivers. It is an illegal violation of our national contract,” said Teamsters general president Sean O’Brien in a statement.
In the final three years of the deal, UPS said it would create 7,500 additional full-time jobs for union members. Additionally, 22,500 existing part-time workers would be converted to permanent full-time positions.
“UPS is obligated to establish tens of thousands of new full-time jobs under the agreement,” said O’Brien. “But CEO Carol Tomé and UPS’s corporate managers are hoping that if they offer paltry severance packages to enough workers, no one will notice the company is setting the union’s contract on fire. UPS Teamsters work too damn hard to be treated with such disrespect.”
The wider deal covers more than 340,000 union workers represented by the Teamsters, with a significant portion of new money flowing to the company’s delivery drivers.
By the last year of the contract, full-time unionized UPS drivers will average up to $170,000 in combined pay and benefits, up from roughly $145,000 prior to the agreement. Top rate average wages amount to $49 per hour.
The Teamsters also have ongoing gripes with UPS related to other contract provisions. The labor group said they formally requested data from UPS on the current number of full-time job opportunities offered to part-time workers to date, as well as the rate of delivery of package cars and vans equipped with air conditioning.
With the contract, the parties brokered a deal to require in-car air conditioning in most UPS delivery vehicles purchased after Jan. 1, 2024. That provision required UPS to provide no less than 28,000 air-conditioned vehicles to drivers by 2028.
However, as of late June, the Teamsters package division estimates that UPS has so far delivered only 10 percent of required air-conditioned vehicles.
The union gave the company until July 1 to respond to the information request, but as of Thursday, UPS had not provided any data and instead requested additional time to respond.
As the contract drama unfolds, UPS is facing wider industry-related headwinds that are impacting total volumes moved across its network, as well as its top rivals at FedEx.
Total deliveries at UPS have been in a slump, with U.S. daily average volume slipping 3.5 percent to 17.4 million packages in the first quarter, and worldwide package volume declining 1.9 percent to 20.8 million parcels.
The delivery firm is also in the middle of a decoupling with its largest customer, Amazon, with the company expected to cut volume with the e-commerce giant by 50 percent by the 2026 second half.
For UPS, this is the first time the company has issued a voluntary buyout plan for its drivers. But the company has offered similar buyouts across the firm in recent years.
In 2020, UPS offered similar buyouts at the corporate level as the courier sought to slash payroll costs for middle managers.
And in 2023, the delivery company presented a similar plan to its pilots, with nearly 200 accepting the voluntary severance package.
