UPS buyout plan for drivers sparks union backlash

While Atlanta-based global freight transportation and logistics services provider UPS and the International Brotherhood of Teamsters (IBT) ratified a new five-year labor deal in August 2023, which the Teamsters, at the time, called “the most historic collective bargaining agreement in the history of UPS,” tensions between the parties appear to have returned.

The Teamsters said earlier today that UPS is preparing to roll out later this month what it called “an illegal plan” to buy out full-time Teamsters-represented UPS employees, labeling it a corporate scheme which directly violated its contract with UPS that represents 340,000 delivery workers. And it added that a Driver Voluntary Severance Plan (DVSP), which UPS has not yet publicly disclosed, would offer cash to drivers to initiate early retirement or quit their job. It also stated that the DVSP would leave most drivers without quality health insurance if they retire under the program and would undermine UPS's own legal commitment to create 22,500 more jobs under its current Teamsters contract.

“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,” said Teamsters General President Sean M. O'Brien. “It is an illegal violation of our national contract. UPS is obligated to establish tens of thousands of new full-time jobs under the agreement. 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.”

What’s more, the Teamsters said the August 2023 contract with UPS came with a guarantee that UPS would fill a minimum of 22,500 permanent full-time jobs with existing part-time workers and also create a minimum of at least 7,500 additional full-time jobs over the final three years of the contract. It also noted that last week the organization formally requested data from UPS, regarding the status of open positions and also the rate of delivery of package cars and vans equipped with air conditioning—a key component of their contract, which required UPS to provide a minimum of 28,000 air-conditioned vehicles to drivers by 2028—adding it gave UPS until July 1 to respond to this request, which it said has remained unanswered, with UPS asking for more time to respond.

As for UPS, the company said in a statement provided to LM that the hard work and dedication of its drivers and every UPSer fuels the success of the company as it serves customers and communities around the world, as it navigates an unprecedented business landscape.

“We are executing the largest network reconfiguration in UPS history,” said UPS. “For the first time ever, in recognition of these unique circumstances, we are looking to offer our full- time UPS drivers the opportunity to participate in a voluntary program that would provide an opportunity to receive a generous financial package if they choose to leave UPS. The financial package available through this program is in addition to any earned retirement benefits, including pension and health care, each driver would have the ability to decide if this voluntary program is beneficial to their family and the plans they have for the future. We have approached the Teamsters on this topic and remain committed to the agreements we reached in 2023 as part of our contract negotiations. As we work through our network reconfiguration, we remain steadfast in our commitment to providing customers with the reliable, industry leading service they expect from UPS.”

On the company’s first quarter earnings call in April, UPS CEO Carol Tomé outlined key strategic actions tied to the company’s January network reconfiguration plans. A major step is the accelerated reduction of Amazon package volume in UPS’s network—cutting it by more than 50% by June 2026—focusing on eliminating unprofitable fulfillment center outbound volume, while retaining profitable segments like returns and Seller Fulfilled shipments. This adjustment is part of UPS’s broader “Network of the Future” initiative, the company’s largest-ever network overhaul aimed at aligning capacity with volume and increasing automation.

UPS is also restructuring operations to match labor and facility usage with volume levels. In 2024, the company closed 11 buildings and plans to complete 164 more operational closures (including 73 buildings) by June. Despite a reduced building footprint, customer access remains strong through UPS’s extensive retail network.

Lastly, UPS’s “Efficiency Reimagined Initiative” targets $1 billion in savings by automating manual tasks and improving procurement. Tomé reported solid progress, with momentum expected to increase in the second quarter.