UPS and Teamsters Clash Over $150,000 Driver Buyouts as 10,000+ May Accept
February 19, 2026 · by Fintool Agent
United Parcel Service is locked in a federal court battle with the Teamsters union over its $150,000 driver buyout program, with a judge expected to rule "in short order" on whether to block the offer that union lawyers say could entice over 10,000 workers to leave.
The clash represents a critical test of UPS's ability to rightsize its workforce as it completes an 18-month plan to reduce Amazon delivery volume by 50%—a strategic pivot that requires eliminating up to 30,000 positions in 2026.
The Court Hearing
In Boston federal court on Thursday, Teamsters attorney Michael Feinberg urged Chief U.S. District Judge Denise Casper to issue an emergency injunction blocking UPS from proceeding with the buyout rollout.
"It's going to be chaotic if not impossible for the arbitrator to remedy that situation," Feinberg argued, warning that tens of thousands of drivers "will be seduced to apply for this hoping to get the $150,000 jackpot."
UPS counsel James Nelson countered that the union's interpretation of the contract is overly broad and that the alternative would force UPS to conduct involuntary layoffs instead—something the contract explicitly allows. He argued that under federal labor law, the court lacks power to issue an injunction in the labor dispute.
Ask Fintool AI AgentA Dramatically Sweetened Offer
The new Driver Choice Program (DCP) represents a dramatic escalation from UPS's prior buyout attempt.
UPS launched a Driver Voluntary Separation Program (DVSP) in late 2025 offering $1,800 in severance per year of service, with a $10,000 minimum. It was targeted primarily at tenured drivers nearing retirement. The result: only 3,000 drivers accepted—far below what UPS needed to meet its cost-reduction targets.
The new 2026 program offers a flat $150,000 to all eligible full-time drivers regardless of seniority, plus any pension and healthcare benefits already earned. UPS plans to extend the offer to approximately 105,000 employees.
Teamsters General President Sean O'Brien characterized the program as an attempt to "inflate its earnings reports on the backs of Teamsters families."
The Amazon Glide-Down
The buyout battle is inseparable from UPS's broader strategic transformation. The company is deliberately shrinking its network to escape the margin-crushing economics of high-volume, low-profit Amazon deliveries.
The numbers from UPS's Q4 2025 earnings call tell the story:
| Metric | 2025 | 2026 Target |
|---|---|---|
| Positions Eliminated | 48,000 | Up to 30,000 |
| Labor Hours Removed | 26.9 million | 25 million |
| Buildings Closed | 93 | 24+ first half |
| Cost Savings | $3.5 billion | $3 billion |
"2026 is the pivotal year for UPS," CEO Carol Tomé said on the January earnings call. "We're in the final six months of our Amazon Accelerated Glide Down plan, and for the full-year 2026, we intend to glide down another million pieces per day while continuing to reconfigure our network."
UPS's average daily package volume in the U.S. declined 8.6% year-over-year in 2025—a drop of 1.6 million pieces per day—and the company expects a similar Amazon volume reduction in 2026.
Ask Fintool AI AgentFinancial Position
Despite the operational upheaval, UPS delivered solid Q4 2025 results:
| Metric | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Revenue ($B) | $21.5 | $21.2 | $21.4 | $24.5 |
| Net Income ($B) | $1.19 | $1.28 | $1.31 | $1.79 |
| EBIT Margin (%) | 8.3%* | 9.0%* | 10.2%* | 10.7%* |
*Values retrieved from S&P Global
For 2026, UPS guided to:
- Revenue of approximately $89.7 billion
- Operating margin of approximately 9.6%
- EPS approximately flat to 2025
- Free cash flow of approximately $6.5 billion
UPS shares traded at $115.53, down 0.5% on Thursday, with a market cap of approximately $98 billion.
The 2023 Contract's Long Shadow
The buyout dispute traces back to the landmark 2023 Teamsters contract that averted a threatened strike. That deal delivered substantial wage increases and created 30,000 new full-time jobs—commitments the union now argues UPS is undermining.
"If Carol Tomé has buyer's remorse for the historic, legally binding contract she signed with rank-and-file Teamsters, that's her problem," O'Brien said. "UPS must dismantle its illegal buyout program and resolve its contract violations in the courts, or the Teamsters will see this greedy corporation in the streets."
Parcel industry expert Satish Jindel of ShipMatrix offered a different perspective, noting that the 2023 contract's wage gains made UPS less competitive. "They are stuck with such a high cost of labor. The total compensation gap makes it very difficult for UPS to retain people at these high wages and to create new jobs."
What Happens Next
Judge Casper indicated she would rule "in short order" on the Teamsters' injunction request. If granted, UPS would be blocked from rolling out buyout offers while the dispute proceeds through arbitration.
UPS argues that arbitration is the appropriate forum under the contract and that any workers who accept buyouts under agreements later ruled improper could be reinstated. The Teamsters counter that reinstatement would be "impossible" once thousands of drivers have left their jobs and potentially found other employment.
The outcome could set a significant precedent for how unionized companies execute large-scale workforce reductions—particularly when voluntary separation programs are used as an alternative to layoffs.
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