UPS has reached an agreement with the Teamsters union to cap its voluntary buyout program at 7,500 drivers, with selections based on seniority, in exchange for being able to offer severance packages nationwide, ending a tug-of-war over who had ultimate authority within the labor contract to eliminate jobs through an incentive.
The settlement limits the total number of severance payments, worth $150,000, to 7,500 long-haul feeder drivers and package car delivery drivers, the Teamsters said in a news release late Sunday. But it reopens the so-called Driver Choice plan to drivers in all states after UPS (NYSE: UPS) on March 24 responded to a Teamster grievance by withdrawing the buyout program in 13 central states where opposition from local union chiefs was strongest.
UPS never stated how many driver positions it hoped to eliminate through buyouts, but the terms suggested it planned many more departures than the 3,000 persons who accepted much-less lucrative offers last fall. Initial offer letters were sent to about 105,000 drivers in late February. The Atlanta-based company has set an overall target this year of cutting 30,000 jobs in conjunction with a major restructuring of its parcel delivery network related to a phase-out of Amazon business and slower shipping demand. A large portion of the cuts will come from 22 warehouses UPS has targeted for closure this year.
The Teamsters continued to challenge UPS over the separation package through the national master contract’s grievance mechanism after failing in federal court to stop the buyouts. The union alleges buyouts violate the 2023 national contract because UPS is directly dealing with workers over job status and undermining employment security guarantees.
UPS had promoted the new buyouts as not based on seniority in an apparent effort to get a greater take rate than in the fall, but said in a statement on Sunday that the buyouts were always based on seniority.
“This outcome aligns with our objective to provide all U.S. drivers with options as we continue to reconfigure our network. The DCP has been well received by our employees, with strong interest across the country. Applications will be approved based on seniority and the needs of the business, as originally planned.
If, for example, 100 drivers serving a particular sorting facility applied for buyouts, the parcel logistics titan always planned to only accept a certain number based on seniority because they earned more than drivers with less tenure, and thus were more beneficial to remove from a financial standpoint, and to maintain enough drivers to support ongoing warehouse operations.
UPS has agreed not to pursue or offer any other severance programs for the life of the current national master contract, which doesn’t expire until July 31, 2028, the Teamsters said.
“UPS never had the contractual right to unilaterally offer driver buyouts, but with enough pressure and member solidarity UPS finally did the right thing by putting its commitments to hardworking Teamsters down in writing,” Teamsters General President Sean O’Brien said in the news release. “Lifelong Teamsters who have given so much of themselves to making UPS the king of parcel delivery will have the right of first refusal on any severance agreements. Union seniority and the rights of all our members will be honored. UPS will no longer have the chance to go around the union without giving Teamsters the respect they deserve at the bargaining table.”
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Write to Eric Kulisch at ekulisch@freightwaves.com.
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