UPS and its workers' union are closer to reaching a deal that could improve conditions for more than 340,000 employees nationally.
Over the weekend, the Teamsters union announced it has reached a tentative agreement with the company on "three major economic issues" — a final piece in what the union has called "the largest collective bargaining agreement in North America."
But union leaders warned a strike isn't yet off the table as both parties make a final push to reach a full agreement on a new four-year contract by July 5.
The labor contract between UPS and Teamsters will expire at midnight July 31 if an agreement is not reached between the two sides. In June, the Teamsters passed a strike action vote with 97% approval, which would allow the Teamsters to strike if they deem it necessary.
Here's what to know.
What happened with UPS, Teamsters over the weekend
In a tweet Saturday, Teamsters announced UPS had tentatively agreed to three major contract revisions that would improve workers' pay and schedules.
The changes include ending forced overtime on drivers' days off, establishing Martin Luther King Jr. Day as a paid holiday and getting rid of a two-tier wage system the union says is "unfair" to drivers who are "flexible" and are not classified as full-time drivers.
"Gains made by the Teamsters at the national table with UPS today cannot be overstated," International Brotherhood of Teamsters General President Sean O'Brien said in a tweet.
To date, the Teamsters and UPS have already reached a tentative agreement on more than 55 non-economic issues, with the union winning everything its wanted for its members, O'Brien said.
Under the new tentative agreement, flexible drivers who do not work traditional Monday-Friday shifts would be reclassified as Regular Package Car Drivers, placed in seniority and have their pay adjusted, which in many cases will increase their wages. Prior to the agreement, flexible drivers were working equal hours but were paid less due to the nature of their shift.
"Whether it’s overtime our members don’t want to take, holidays they know they deserve or equal pay for equal work, if we stay united and commit to protect each other to the bitter end, there is no chance in hell we lose this fight," Teamsters General Secretary-Treasurer Fred Zuckerman said.
Why a deal must be reached by July 5
Wednesday marks a crucial deadline for UPS.
Since the start of negotiations in April, the Teamsters have made it clear they would not work a "single minute" past the expiration of the contract. In order to prevent a strike, UPS and the union must reach a tentative agreement in time for its union members to review the deal and vote to ratify the contract.
UPS has said it will reach that agreement by July 5.
On June 30, UPS presented the Teamsters with a revised contract the union deemed acceptable to negotiate. This new offer persuaded the Teamsters to return to the bargaining table over the weekend, resulting in the revised tentative agreement.
"We are encouraged the Teamsters are ready to continue negotiations and discuss our most recent proposal," Michelle Polk, a spokesperson for UPS told the Courier Journal in a statement Friday. "We look forward to the union’s input so we can reach a timely agreement and provide certainty for our employees, our customers and the U.S. economy."
The labor contract between UPS and Teamsters is composed of a slew of supplemental contracts alongside the national contract. By mid-May a tentative agreement had been reached on all supplements except two: Louisville and Northern California. Late last week, a tentative agreement was reached on the Louisville and Northern California supplemental contracts.
"I think it's we're moving forward very positively," said Joe Sexson, a union steward and local negotiating committee member for Teamsters Local 89. "This is probably the best [supplement] we've had the 23 years I've been here."
Why experts say a strike is unlikely
Negotiations have been tense between the Teamsters and UPS, with the union declaring a nationwide strike is "imminent" on June 28.
That same day, Teamsters Local 89, the union representing roughly 10,000 UPS workers in Louisville, held a practice picket outside of the Worldport facility – a move replicated by Teamsters union shops coast to coast.
Despite the declaration of a strike, however, experts at Deutsche Bank "feel comfortable that a strike will not occur," according to a risk analysis by the bank.
In May, Deutsche Bank forecasted the tentative agreement on flexible drivers becoming reclassified and estimated the change would cost UPS roughly $140 million, less than 0.2% of the company's current cost structure.
"This is an incredibly small amount for what appears to be the main ask by the Teamsters," read the strike risk analysis written by Amit Mehrotra and Chris Robertson.
Mehrotra and Robertson noted the Teamsters strike fund sat at $346 million at the end of 2022 — a 20% decline from 2013 despite active membership remaining at a constant rate. The bankers estimated a strike would cause every UPS worker to take a roughly 70% pay cut and the strike fund would be depleted within three weeks.
"Beyond the Teamster's financial readiness for a strike, which appears limited, in our view, we also note the significant benefits enjoyed by UPS Teamsters," Mehrotra and Robertson wrote. "The bottom line is it's been better to be a UPS Teamster compared to almost any other comparable job, and the Teamsters organization have greatly benefited from UPS's growth."
UPS strike news: Teamsters closer to a deal, strike still possible - USA TODAY
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