UPS has reached a tentative contract with its 340,000-person union, potentially averting a strike that threatened to disrupt package deliveries for millions of businesses and households nationwide. 

The agreement was announced Tuesday, the first day that UPS and the Teamsters had returned to the table after contentious negotiations broke down earlier this month. 

Negotiators had already reached tentative agreements on several issues but continued to clash over pay for part-time workers, who make up more than half of the UPS employees represented by the union. 

The Teamsters hailed the agreement as historic. 

Under the tentative agreement, which still needs union members’ approval, full- and part-time union workers will get $2.75 more per hour in 2023, and $7.50 more over the duration of the five-year contract. The agreement also includes a provision to increase starting pay for part-time workers — whom the union says are the most at risk of exploitation — from $16.20 per hour to $21 per hour. The average pay for part-timers had been $20. 

Teamsters General President Sean M. O’Brien said in a statement that UPS put $30 billion more on the table and said the deal “sets a new standard in the labor movement.” 

The two sides had tentatively agreed to make Martin Luther King Jr. Day a full holiday and to end forced overtime on drivers’ days off. Tentative agreements on safety issues had also been reached, including equipping more trucks with air conditioning. 

UPS had also agreed to eliminate a lower-paid category of drivers who work shifts that include weekends and convert them into regular full-time drivers. Under the agreement, the company will create 7,500 full-time jobs and fill 22,500 open positions, allowing more part-timers to transition to full-time. 

“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,” Carol Tome, UPS CEO, said in a written statement. 

Voting on the new contract begins August 3 and concludes August 22. 

Industry groups, the U.S. Chamber of Commerce, labor leaders and the White House applauded the deal. 

“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,” President Joe Biden said in a statement. 

Union members, angered by a contract they say union leadership forced on them five years ago, argued that they have shouldered the more than 140% profit growth at UPS as the pandemic increased delivery demand. Unionized workers said they wanted to right what they saw as a bad contract. 

The 24 million packages UPS ships daily amount to about a quarter of all U.S. parcel volume, according to the global shipping and logistics firm Pitney Bowes. According to UPS, that’s equivalent to about 6% of the nation’s gross domestic product. 
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