United Parcel Service (UPS) has reached a settlement with the Teamsters National Negotiating Committee that enforces limits on severance offers while prioritizing the seniority of Teamsters drivers. This agreement, achieved after UPS was compelled to negotiate due to grievances over its Driver Choice Program, allows eligible drivers opting for early retirement to receive $150,000. The new restrictions apply across all job classifications, with a cap of 7,500 drivers eligible for severance payments.
Effective immediately, UPS has committed not to introduce any additional severance programs until the expiration of the Teamsters National Master Agreement on July 31, 2028. The settlement underscores the contributions of Teamsters members to UPS while reinforcing the union’s authority in negotiations. Separately, UPS has announced plans to eliminate up to 30,000 operational jobs and close multiple facilities by 2026 in a strategic pivot away from reliance on Amazon, which is expected to reduce its shipping volume by more than 50% by mid-2026.
UPS’ competitor, FedEx, is also enacting cost-cutting measures, aiming for over $1 billion in savings through initiatives like its DRIVE program. Despite these restructuring efforts, UPS shares have underperformed in recent months, trading at a discount compared to industry levels.
