June 22, 2018 12:45 PM, EDT

UPS, Teamsters Reach Tentative Deal on Five-Year Contract

UPS delivery in NYC (Victor J. Blue/Bloomberg)

More than five weeks before its contract with UPS Inc. expires Aug. 1, the International Brotherhood of Teamsters and the Atlanta-based shipping giant announced late June 21 tentative agreement on a five-year contract that industry officials say could pave the way for UPS to begin Sunday delivery service.

According to information released by the Teamsters, current full-time workers will receive pay increases of $4.15 per hour during the time of the contract. The union said full-time UPS drivers now earn on average nearly $75,000 a year, or $36 an hour.

Pay for part-time employees will increase from $10 to $13 beginning Aug. 1, and to $15.50 by Aug.1, 2022. The current four-year wage progression from $10 an hour to $12.50 per hour has been eliminated.

Teamsters logo

Other terms that were reached include increased pension benefits for full- and part-time employees, and language that would take many loads currently moved by railroad off the rails and shifted to newly created sleeper teams. The union said this change could result in at least 2,000 new full-time jobs for members, and sleeper-team jobs are the highest paying in the bargaining unit.

“UPS’ goal has been to reward the company’s employees for their contributions to its success while enabling the business to remain flexible to meet its customers’ needs. Each of these goals has been met in the new agreement. UPS is well-positioned to grow and meet the needs of its customers,” UPS spokesman Mike Mangeot said in a statement.

The deal also includes language to have “a new full-time combination driver” who will start at $20.50 an hour and reach a top scale of $34.79 in five years. Many of those employees could work in different units on weekdays, such as loading trucks, and then drive on weekends, especially as UPS considers adding Sunday delivery service. Spurred by growth in e-commerce, UPS began Saturday deliveries more than a year ago. UPS said that decision to add one day of weekend service created about 4,000 jobs.

“This provision will help to resolve several membership concerns, including Saturday and Sunday delivery, excessive forced overtime, time off, create additional high-paying, full-time opportunities for part-time employees and provide thousands of additional contributors to our Teamster pension funds.”

UPS logo

“Getting a handshake agreement done a month in advance of the expiration was important for both parties,” Ben Hartford, an analyst with Milwaukee-based R.W. Baird, told Transport Topics. “What was most important was for UPS to have some flexibility within their operations to respond to however the market develops. If seven-day delivery is a solution, then I am certain it was something that was discussed.”

While the tentative agreement covers the national bargaining unit, numerous local issues need to be resolved. UPS and the Teamsters plan to resume negotiations on those issues July 9-12. The agreement is subject to a ratification vote by the estimated 250,000 workers in the bargaining unit, which includes drivers, loaders, package sorters, dockworkers and operations team members. However, no agreement has been reached for the 11,000 UPS Freight workers. Those contract issues also will be discussed July 9-12, with economics and subcontracting as the focus.

“I am confident that once the membership has reviewed and understood the changes, they will see that this agreement is among the very best ever negotiated for UPS members,” Denis Taylor, co-chairman of the Teamsters UPS National Negotiating Committee, said in a statement.

Earlier this month, the Teamsters had authorized a strike that could have started in August if a new contract were not finalized. The last time the union went on strike against UPS was in 1997, spanning 16 days and costing the company tens of millions of dollars in lost business.

UPS Teamsters United, an organization within the union that has in the past been critical of the union’s executive leadership, released a statement indicating that the organization isn't enamored with what has been negotiated.

"While the full agreement is not out yet, the highlights that have been released by the IBT include many lowlights for working Teamsters, including two-tier hybrid drivers doing the same work for less, no catch-up raises for part-timers, and part-time starting pay that is less than the minimum wage in many areas, UPS Teamsters United spokesman David Levin said. "The international union should end the information brownout so Teamster members at UPS can scrutinize the proposed contract for both improvements and problems and make an informed decision."

UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.