The UPS driver buyout settlement, reached on April 5, 2026, capped the company’s $150,000 Driver Choice Program at 7,500 drivers nationwide and prohibited UPS from offering any additional severance programs for the rest of the National Master Agreement, which runs through July 31, 2028.1Teamsters. Teamsters Reach Strong Settlement With UPS on Driver Severance Packages Offers now go out by seniority to long-haul feeder drivers and regular package car drivers, and union members hold a right of first refusal on any severance agreement.
What UPS Originally Offered
UPS announced the Driver Choice Program in late January 2026. It offered every eligible full-time U.S. driver a flat $150,000 lump sum, on top of pension and healthcare benefits already earned, in exchange for resigning permanently.2FreightWaves. Judge Gives UPS Green Light for $150,000 Buyouts to Drivers Roughly 105,000 drivers were eligible regardless of seniority.3Supply Chain Dive. UPS Teamsters Driver Buyouts Lawsuit Denied The enrollment window ran February 13 through March 12, 2026, with separations expected to begin in late April.
Participating drivers had to commit never to work for UPS again and sign an irrevocable separation letter. The program set no cap on how many drivers could accept. UPS said the offer was voluntary and designed to prevent involuntary layoffs as the company shrank its network and shifted more low-margin parcels to the U.S. Postal Service.
Why the Teamsters Fought the Program
On February 9, 2026, the International Brotherhood of Teamsters sued UPS in the U.S. District Court for the District of Massachusetts, seeking an emergency restraining order and preliminary injunction to block the program.4Reuters. Teamsters Union Sues UPS Over New Driver Buyout Program
The complaint alleged at least six violations of the National Master Agreement signed in 2023. The core objections:
- UPS was negotiating separation contracts directly with individual workers instead of through the union.
- The company was cutting union positions despite contract language committing it to preserve and create jobs.
- The program undermined the role of union shop stewards.
- UPS had ignored more than 57 union requests for documents about the buyout plan since late January.5Teamsters. Teamsters Sue UPS for Breach of National Contract
The union also argued that the irrevocable separation letter would waive a driver’s right to grieve or arbitrate the terms of separation through the union, which became central to the legal fight.
The Federal Court Ruling
UPS voluntarily paused the program while the court considered the motion. The company argued the dispute belonged in arbitration under the contract’s own grievance procedures, that the National Master Agreement did not specifically prohibit voluntary incentive programs, and that prior arbitration rulings had allowed UPS to reach agreements with individual employees so long as they did not conflict with contract provisions.6Yahoo Finance. UPS Challenges Teamster Suit Over Driver Buyouts
On February 20, 2026, Chief U.S. District Judge Denise J. Casper denied the Teamsters’ motion.7Justia. International Brotherhood of Teamsters v. United Parcel Service, Memorandum and Order The court found the union had not shown irreparable harm. Judge Casper pointed to Article 6, Section 1 of the National Master Agreement, which states that any individual agreement conflicting with the contract is “null and void.” An arbitrator, she reasoned, would have the authority to invalidate the releases, reinstate employees, and award back pay if the buyout was later found to violate the contract.3Supply Chain Dive. UPS Teamsters Driver Buyouts Lawsuit Denied Any harm to individual drivers, the judge added, would flow from their own voluntary choice to participate.
The Teamsters voluntarily dismissed the federal lawsuit on March 5, 2026, and moved the fight into the contractual grievance and arbitration process.8CourtListener. International Brotherhood of Teamsters v. United Parcel Service, Docket
The 13-State Withdrawal That Shifted the Fight
While the federal case was pending, local Teamsters unions filed grievances under the contract. The heaviest pressure came from the Central Region, where nearly 37 local unions across 13 states filed grievances against the Driver Choice Program.9Teamsters. UPS Admits Driver Buyouts Violate Teamsters Contract in Central Region Those grievances cited both the National Master Agreement and the UPS Teamsters Central Region Supplement, which restricts UPS from directly offering incentive programs that have not been voted on and approved by employees and the union.
On March 24, 2026, UPS notified the Teamsters that it was withdrawing the Driver Choice Program in all 13 Central Region states.10Supply Chain Dive. UPS Teamsters Driver Buyouts Withdrawn in 13 States General Secretary-Treasurer Fred Zuckerman called the retreat “an admission of guilt, plain and simple.” UPS said the program complied with the contract and was popular with drivers nationally.
The Settlement Terms
With the federal case dismissed, the buyout pulled from 13 states, and arbitration hearings on an earlier 2025 buyout program approaching, the Teamsters National Negotiating Committee and UPS reached a national settlement on April 5, 2026. The deal resolved the pending national grievances and locked in binding terms for the remainder of the program.
The core provisions:
- Total buyouts capped at 7,500 drivers nationwide, down from an uncapped program open to all 105,000 eligible drivers.11FreightWaves. UPS to Cap Driver Buyouts at 7,500 After Teamster Pushback
- Payment stays at $150,000 per driver for early retirement, in addition to earned pension and healthcare benefits.
- Offers go to long-haul feeder drivers and regular package car drivers based on seniority, with union members granted a right of first refusal on any severance agreement.
- UPS agreed not to pursue or offer any other severance programs for the remainder of the current National Master Agreement, which expires July 31, 2028.
Teamsters General President Sean M. O’Brien said the settlement meant UPS could no longer “go around the union” and that seniority rights would be honored for any remaining separation offers.1Teamsters. Teamsters Reach Strong Settlement With UPS on Driver Severance Packages
What This Means for Drivers Through 2028
If you’re a full-time UPS driver, the settlement changes the practical picture in three ways. First, the $150,000 offer no longer goes to everyone: only 7,500 slots exist, and they get filled by seniority within the eligible classifications rather than first-come, first-served. Second, the union sits between you and any separation agreement, with a right of first refusal on the terms. Third, no new severance offer is coming from UPS before the contract expires on July 31, 2028. Whatever the company’s staffing plans look like after that date will be a subject for the next round of contract negotiations.
The settlement did not resolve the deeper question the dispute raised. The 2023 National Master Agreement contains no language addressing voluntary separation programs at all. The Teamsters read that silence as a bar on unilateral buyouts; UPS read it as permission. Judge Casper’s ruling turned on where the fight belonged rather than who was right, and the April agreement settled the immediate program without settling the underlying contract question. That one is still open for a future arbitrator, or for the bargaining table in 2028.