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United Parcel Service (UPS) has reached a new agreement with the International Brotherhood of Teamsters to limit severance offers for drivers, following a dispute over planned job cuts and early retirement packages.

The deal, announced Sunday, caps the number of drivers eligible for severance at 7,500 nationwide.

Under the agreement, drivers who choose to leave will receive $150,000 as part of an early retirement offer, Reuters reported.

The move comes as UPS pushes forward with plans to reduce its workforce by up to 30,000 jobs and close 24 facilities this year.

Union leaders had strongly opposed UPS's earlier Driver Choice Program, arguing it was introduced without proper negotiations and violated the 2023 labor contract.

The dispute led to formal grievances and forced the company to halt the program in multiple states before returning to the bargaining table.

Sean M. O'Brien said the new agreement ensures workers are treated fairly and that union rules are respected.

"UPS never had the contractual right to unilaterally offer driver buyouts, but with enough pressure and member solidarity UPS finally did the right thing," he said.

UPS Limits Severance Deals

The updated terms give priority to drivers based on seniority. Long-haul feeder drivers and regular package car drivers will be considered first for the severance packages.

According to Teamster, the agreement also prevents UPS from offering any additional buyout programs for the rest of the current contract, which runs through July 31, 2028.

O'Brien emphasized that the deal protects workers who have spent years building the company. "Lifelong Teamsters... will have the right of first refusal on any severance agreements," he said, adding that union seniority and member rights will be honored moving forward.

UPS's decision to cut jobs is part of a broader shift in its business strategy. The company has been working to reduce its reliance on lower-profit deliveries, especially those tied to major client Amazon.

This change has led to restructuring efforts, including facility closures and workforce reductions.

The agreement reflects a balance between the company's cost-cutting goals and the union's demand to protect its members.

While layoffs are still expected, the new terms set clear limits and ensure that workers are given structured options rather than sudden changes.

For many drivers, the $150,000 offer may provide a path to retirement, but the capped number means not everyone will be eligible.

The union said it will continue to monitor the situation to make sure UPS follows the agreement.