UPS is offering delivery drivers voluntary severance packages worth $1,800 per year of service, with a minimum payout of $10,000, according to a recent statement from the company.
Drivers have until Thursday to apply for the program, according to an employee memo visible in a TikTok video posted last week by the Teamsters union, which claims the buyout violates the collective bargaining agreement and is urging members not to accept the offer. The video is accompanied by the Elvis Presley song “Return to Sender” and shows a man tearing up the offer sheet. FreightWaves was able to magnify the image with software tools to read the text, which is fuzzy to a normal viewer.
“UPS Teamsters want secure retirements with hard-earned pensions, not paltry buyouts,” the union said in an X message on Sunday. A driver who spoke on a YouTube video called $1,800 per year of service “a slap in the face.”
UPS (NYSE: UPS) announced the buyout program on July 3 as a follow-on to the largest network reconfiguration in company history, now underway. The strategy, called Network of the Future, calls for the closing of 200 domestic package sortation centers, investment in more automation and consolidation of volumes in more efficient facilities. The integrated parcel logistics giant earlier this year announced plans to eliminate 20,000 front-line positions to better align the workforce with the smaller footprint and a planned 50% downsizing in business from Amazon, its largest customer.
A driver with 27 years of experience would receive a $48,600 buyout, according to the internal communication posted by the Teamsters.
Applicants will be considered for separation dates between Aug. 31 and Oct. 31, depending on the local needs, UPS said. If the number of applications exceeds eliminated positions, approvals will be granted in order of seniority. Additional applications may be considered for separation dates between Feb. 1 and March 31. The financial package is in addition to earned retirement benefits, including pension and healthcare.
Supply Chain Dive first reported on the specifics of the buyout offer.
The Teamsters argue the Driver Voluntary Separation Program violates the union contract because it wasn’t negotiated and any program that changes the terms of employment, such as compensation and separation, must be bargained with the union. Seniority order for buyouts also requires union approval. And, the union notes, that UPS offered job security guarantees in 2023, as well as promising to elevate more than 20,000 part-time drivers to full-time status.
The Teamsters are urging UPS drivers not to accept the buyout terms, likely because they believe they can negotiate a better deal, and also to maintain control over how these types of scenarios are handled, experts said
“This situation with UPS and the Teamsters is a classic example of how even a company’s apparent right to manage its resources is limited by the terms of existing agreements. The ‘illegality,’ according to the union, lies not in the act of downsizing itself, but in the procedure and conditions that violate the current collective bargaining agreement. This is a struggle over who dictates the rules of engagement in the relationship between the company and its union-represented employees,” wrote Dmitriy Karpov, co-founder and CFO of e-commerce technology provider Split Development LLC, on LinkedIn.
Satish Jindel, CEO of ShipMatrix, a parcel shipping consultancy and analytics provider, said in an interview, “UPS is allowed to offer buyouts. Workers can say no. Nothing says they can’t make an offer” when market conditions change.
He said the Teamsters is lucky UPS backed down from a looming strike in 2023 because it could have become union-free at half the cost by offering those jobs to FedEx and Amazon drivers, who would have eagerly jumped at a $25/hour rate and good benefits.
UPS is scheduled to issue second quarter earnings results on Tuesday.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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