UPS, Teamsters reach labor deal to avoid strike

Teamsters: We've reached a tentative agreement with UPS

UPS and the Teamsters union representing about 340,000 workers at the package carrier on Tuesday said they reached a preliminary labor deal that includes raises for both full- and part-time workers and narrowly avoids a potential strike that could have started next week.

It was the latest in a string of labor deals where workers from pilots to aerospace manufacturing employees have pushed for and won higher pay.

The agreement is worth $30 billion, according to Teamsters General President Sean O’Brien.

“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,” he said in a statement.

Existing part-time workers will get a raise to at least $21 an hour, if workers approve the new contract, the union said. Part-time pay was a sticking point in negotiations. Full-time workers will average $49 an hour. Current workers will get $2.75 more an hour this year and $7.50 an hour more during the five-year contract.

The deal would also end mandatory overtime on drivers’ days off, according to an outline of the contract provided by the Teamsters.

“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. “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.”

United Parcel Service (UPS) driver pushes a dolly of packages towards a delivery van on a street in New York.

Victor J. Blue | Bloomberg | Getty Images

Workers still need to ratify the tentative deal. Teamsters-represented UPS employees voted to authorize a strike after July 31 if the two sides didn’t reach an agreement. The labor stoppage could have rippled throughout industries like retail that rely heavily on the package delivery giant.

The National Retail Federation cheered the tentative agreement.

“UPS is a major partner of the retail industry, and we are grateful it came to an agreement with the Teamsters without disruption to the marketplace,” Matthew Shay, CEO of the trade group, said in a statement. “Retailers rely on stability within their supply chains, and this agreement will bring long-term stability, as well as assurance to the millions of businesses and employees who rely on smooth and efficient last-mile delivery.”

Some recent labor negotiations haven’t yielded new contracts, despite preliminary deals. On Monday, pilots at UPS rival FedEx rejected a tentative labor deal, with 57% voting against the agreement.

— CNBC’s Melissa Repko contributed to this report.

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