UPS has started notifying approximately 105,000 package delivery drivers of a voluntary severance program offering up to $150,000 to leave the company, as part of a broader effort to streamline its parcel network and reduce costs amid softer shipping volumes.
A federal judge last week authorized UPS to proceed with the buyout program, dismissing objections raised by the Teamsters union. The company plans to reduce its workforce by 30,000 positions this year under a network consolidation strategy designed to improve efficiency.
During court proceedings, Teamsters attorneys said they expect as many as 10,000 drivers to accept the offer.
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$150,000 Separation Package
The “Driver Choice Program” allows full-time drivers to resign in exchange for a $150,000 pre-tax lump-sum payment, along with retention of earned retirement benefits, including pension and healthcare coverage.
Eligibility for the payout does not depend on seniority.
Genny Bowman, UPS vice president of communications, confirmed that the company has begun distributing details of the offer to drivers nationwide. Court documents indicate the separation date is scheduled for late April.
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Possibility of Involuntary Layoffs
UPS has signaled that involuntary layoffs remain possible depending on participation levels in the voluntary program.
The company is also reducing warehouse headcount through attrition and layoffs as it moves forward with the closure of 22 facilities this year.
Last fall, roughly 3,000 drivers accepted a previous buyout offer. That package was less generous, providing $1,800 per year of service with a minimum payout of $10,000.
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Legal Dispute with the Teamsters
The Teamsters union argued that the buyout program violated the national labor contract signed in August 2023, under which UPS committed to adding jobs. Union representatives claimed the program effectively altered employment terms and therefore required negotiation.
Judge Denise Casper of the U.S. District Court in Massachusetts rejected that argument, ruling that employees would not be harmed by voluntarily accepting the offer and noting that any arbitration outcome would apply to them. She further indicated that voluntary buyouts represent a preferable alternative to involuntary termination.
The initiative marks a significant step in UPS’s restructuring efforts as it recalibrates its network in response to shifting parcel demand and evolving market conditions.
