UPS has reached a five-year tentative contract agreement with its 340,000 union workers on Tuesday, averting a strike that could have potentially devastated the U.S. economy and impacted businesses and households alike.

What You Need To Know

  • UPS and the Teamsters union representing 340,000 employees reached a tentative agreement, averting a potentially devastating strike

  • The Teamsters called the tentative agreement, which includes higher wages and air conditioning in delivery trucks, "historic"

  • Members of the Teamsters, angered by a contract they say was forced on them five years ago by union leadership, clashed with UPS over pay as profits for the delivery company soared in recent years

"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,” UPS CEO Carol Tomé said in a statement. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong."

The Teamsters called the tentative agreement "historic" and "overwhelmingly lucrative." It includes, among other benefits, higher wages and air conditioning in delivery trucks.

"Today, the #Teamsters reached the most historic tentative agreement for workers in the history of @UPS , protecting and rewarding more than 340,000 UPS Teamsters nationwide," the union wrote on Twitter.

Members of the Teamsters, angered by a contract they say was forced on them five years ago by union leadership, clashed with UPS over pay as profits for the delivery company soared in recent years. Union leadership was upended last year with the election of Sean O'Brien, a vocal critic of the union president who signed off on that contract, James Hoffa, the son of the famous Teamsters firebrand.

"Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits. Teamster labor moves America," O'Brien said in a statement. "The union went into this fight committed to winning for our members. We demanded the best contract in the history of UPS, and we got it."

Highlights of the deal, according to a statement from the Teamsters, include:

  • Wage increases of $2.75 more per hour in 2023 and $7.50 per hour over the course of the contract
  • Immediate raises for existing part-time employees to "no less than $21 per hour immediately"
  • New part-time hires starting at $21 per hour, growing to $23 per hour
  • Wage increases for full-time employees, improving their top rate to $49 per hour, making UPS Teamsters "the highest paid delivery drivers in the nation"
  • Safety and health protections, including vehicle air conditioning and cargo ventilation
  • Martin Luther King Jr. Day as a holiday for the first time for all UPS Teamsters
  • No more forced overtime on Teamster drivers’ days off
  • The creation of 7,500 new full-time Teamster jobs at UPS and fulfillment of 22,500 open positions

"UPS has put $30 billion in new money on the table as a direct result of these negotiations," O'Brien said. "We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers."

In a statement Tuesday afternoon, President Joe Biden congratulated UPS management and Teamsters negotiators on reaching the tentative agreement, saying that the announcement "moves us clsoer to a better deal for workers that will also add to our economic momentum."

"I’ve always said that collective bargaining works by providing workers a seat at the table and the opportunity to improve their lives while contributing fully to their employer’s success," Biden said. "This agreement is a testament to the power of employers and employees coming together to work out their differences at the bargaining table in a manner that helps businesses succeed while helping workers secure pay and benefits they can raise a family on and retire with dignity and respect."

The two sides reached a tentative agreement early on safety issues, including equipping more trucks with air conditioning equipment. Under the agreement, UPS said it would add air conditioning to U.S. small delivery vehicles purchased after January 1, 2024.

But a two-tier wage system remained a sticking point. The Teamsters called it "unfair," and that is ended under the new agreement.

Profits at UPS have grown more than 140% since the last contract was signed as the arrival of a deadly pandemic drastically transformed the manner in which households get what they need.

Unionized workers argued that were the ones shouldering growth at the Atlanta company and appeared dead set on righting what they saw as a bad contract.

Member voting begins Aug. 3 and concludes Aug. 22.

UPS has the largest private-sector contract with workers in North America and the last breakdown in labor talks a quarter century ago led to a 15-day walkout by 185,000 workers that crippled the company.