Judge gives UPS green light for $150,000 buyouts to drivers

UPS is expected to present a resignation incentive package to parcel drivers next week after a federal judge denied a union motion to stop the company from implementing its plan. (Photo: Jim Allen/FreightWaves)

Eric Kulisch

Sun, February 22, 2026 at 3:47 AM GMT+9 3 min read

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A federal judge on Friday dismissed a Teamsters request to prohibit UPS from implementing a $150,000 buyout program for parcel delivery drivers, saying that union claims of harm were unfounded because arbitration can resolve any problems and that workers will be subject to involuntary layoffs if some don’t voluntarily leave the company.

The decision means UPS is likely to begin informing employees next week about the voluntary separation program.

UPS (NYSE: UPS) is restructuring its delivery network and says it needs fewer drivers because of shrinking volumes. A Teamsters lawyer said during a hearing on Thursday that the union expects 10,000 drivers to accept UPS’s offer, Reuters reported from the courthouse.

Courts are typically prohibited from issuing injunctions in peaceful labor disputes where arbitration is an approved method of dispute resolution. Judge Denise Casper of the U.S. District Court in Massachusetts ruled an arbitrator would still have power to reinstate any employees under any separation arrangement that is ruled improper and noted that the union will be harmed more if UPS opts to only reduce the workforce through layoffs and attrition.

“The union has failed to show that it will suffer irreparable harm in the absence of an injunction,” Casper wrote.

The Teamsters union argued in its Feb. 8 petition that UPS’s planned voluntary separation program violates the national master agreement because it wasn’t negotiated with the union and reverses hiring commitments. It also complained that any potential remedy ordered by an arbitrator under the contract’s arbitration process won’t apply to workers who have accepted a lump sum payment and resigned. Under the separation package, drivers agree not to seek employment again with UPS.

The parcel logistics giant telegraphed on its earnings call in late January that it planned to eliminate another 30,000 frontline positions this year, including through a second driver buyout program, and shutter two dozen facilities. Average daily volume declined 8.6% in 2025 and was down 10.8% year over year in the fourth quarter. Demand is under pressure as e-commerce growth normalizes following the pandemic, Amazon draws down business under a mutual agreement and UPS begins to outsource certain economy shipments to the U.S. Postal Service.

UPS says intent of the buyout program is to reduce the number of drivers that could be released through layoffs, according to court documents.

UPS plans to extend its Driver Choice program to 105,000 drivers regardless of seniority, offering a $150,000 lump sum payment plus previously earned benefits in exchange for resigning. Drivers who accept the offer must commit to never work for UPS again and to waive their rights to union representation in the event grievances arise over execution of the agreement.

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The new program is much more lucrative than the first buyout program last fall, which provided $1,800 in severance pay per year of service, with a $10,000 minimum, to eligible drivers. Only 3,000 drivers accepted the offer, according to UPS’s legal filing.

UPS initially planned to provide information about Driver Choice on Feb. 11, but agreed to hold off moving forward until the judge ruled on whether to issue an injunction. Voluntary separations are scheduled to begin at the end of April.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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