UPS Workers Approve 5-year Contract, Capping Contentious Negotiations That Threatened Deliveries

The union representing 340,000 UPS workers said Tuesday that its members voted to approve the tentative contract agreement reached last month, putting a final seal on contentious labor negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide.

The Teamsters said in a statement that 86% of the votes casts were in favor of ratifying the national contract. They also said it was passed by the highest vote for a contract in the history of the Teamsters at UPS.

The union said more than 40 supplemental agreements were also ratified, except for one that covers roughly 170 members in Florida. The national master agreement will go into effect as soon as that supplement is renegotiated and ratified, it said.

UPS said voting results for deals covering employees under two locals are expected soon.

"Our members just ratified the most lucrative agreement the Teamsters have ever negotiated at UPS," Teamsters General President Sean M. O'Brien said in a statement. "This contract will improve the lives of hundreds of thousands of workers."

He said the contract set a new standard for pay and benefits.

"This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon better pay attention," O'Brien said, giving a nod to the union's growing ambitions to take on the e-commerce behemoth.

Voting on the new five-year contract began Aug. 3 and concluded Tuesday.

After negotiations broke down in early July, Atlanta-based UPS reached a tentative contract agreement with the Teamsters just days before an Aug. 1 deadline. It came as large and small businesses were working on contingency plans in the event of a strike, which would have spiked shipping prices and scrambled supply chains.

Earlier this month, the delivery company reported its revenue fell for the second quarter as package volume declined amid negotiations with the union. The shipping industry has also been impacted by unpredictable consumer spending.

The company, which has lowered its full-year revenue expectations by $4 billion, had said it expected bargaining to restart if members rejected the deal. But that outcome could have also opened the door to a strike with the potential to cause widespread disruption.

Under the tentative agreement, full- and part-time union workers will get $2.75 more per hour in 2023, and $7.50 more in total by the end of the five-year contract. Starting hourly pay for part-time employees also got bumped up to $21, but some workers said that fell short of their expectations.

UPS says that by the end of the new contract, the average UPS full-time driver will make about $170,000 annually in pay and benefits. It's not clear how much of that figure benefits account for.

As part of the deal, the delivery company also agreed to make Martin Luther King Jr. Day a full holiday, end forced overtime on drivers' days off and stop using driver-facing cameras in cabs, among a host of other issues. It eliminated a two-tier wage system for drivers and tentative deals on safety issues were also reached, including equipping more trucks with air conditioning.

Union members, angered by a contract they say union leadership forced on them five years ago, argued in the lead up to the deal that they have shouldered the more than 140% profit growth at UPS as the pandemic increased delivery demand. Unionized workers said they wanted to fix what they saw as a bad contract.

The Teamsters' leadership was upended two years ago with the election of O'Brien, a vocal critic of union President James Hoffa -- son of the famed Teamsters firebrand -- who signed off on the previous contract in 2018.

The 24 million packages UPS ships daily amount to about a quarter of all U.S. parcel volume, according to the global shipping and logistics firm Pitney Bowes. UPS says that's equivalent to about 6% of the nation's gross domestic product.

This isn't the first showdown the union has had with the delivery company. During the last breakdown in labor talks a quarter of a century ago, 185,000 UPS workers walked out for 15 days, crippling the company's ability to function.

A walkout this time would have had much further-reaching implications, with millions of Americans now accustomed to online shopping and speedy delivery. The consulting firm Anderson Economic Group estimated a 10-day UPS strike could have cost the U.S. economy more than $7 billion and triggered "significant and lasting harm" to the business and workers.

Labor experts say they see the showdown as a demonstration of labor power at a time of low U.S. union membership. This summer, Hollywood actors and screenwriters have been picketing over pay issues. United Auto Workers are considering a potential strike.

"Together we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees and to UPS and our customers," Carol Tomé, UPS CEO, said when the tentative deal was announced.

Industry groups, the U.S. Chamber of Commerce, labor leaders and President Joe Biden also applauded the deal.

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