Teamsters members voted down a new contract with United Parcel Service Inc., but the union’s leadership said the turnout was too low to reject the contract. Both sides said they would return to the negotiating table ahead of the holiday season.
Preliminary voting results showed that 54.3% of votes cast opposed the five-year deal that represents 243,000 drivers, package sorters and other workers, the International Brotherhood of Teamsters disclosed Friday evening. Another pact representing 11,000 UPS Freight workers was also rejected, with 62.1% of votes cast opposing that deal.
The Teamsters issued a statement saying the union considered the larger contract ratified despite the vote tally. Under the union’s rules, a nationwide contract needs to be rejected by two-thirds of ballots when less than half of members cast a vote. The union said 44% of members voted, and the final tally was 42,356 in favor and 50,248 opposed.
“Not enough members covered by the National Master UPS Agreement exercised their right to vote,” the union said. “And as we saw in the 2016 U.S. Presidential election, winning the popular vote does not necessarily win the election when the Constitution requires you to win the Electoral College vote. As Teamsters, we too must abide by the rules in our Constitution. Thus, the National Master UPS Agreement has been ratified.”
Although they declared the larger contract ratified, union leaders said they would reopen talks with the company. “We will be going back to the company to talk to them about some additional changes,” said Denis Taylor, co-chair of the Teamsters negotiating committee.
Talks will also resume on other smaller contracts, including the one representing UPS Freight workers, where enough members voted to reject the deal. A number of other regional and local agreements were also voted down.
A UPS spokesman said the company “will meet with the Teamsters leadership in the near future to discuss next steps regarding the agreements.” A contract extension is in place for the previous deal that expired in July and the company doesn’t expect any disruption to its operations. “Business continues as usual at UPS.”
“The Teamsters’ negotiating committee and UPS developed fair agreements that reward UPS employees for their contributions to the company’s success, including improved wages, benefits and job creation,” company spokesman Steve Gaut said.
The votes show a deep rift in the Teamsters ranks, dealing a blow to the Teamsters leadership and UPS that tried to sell its rank-and-file on the contracts.
The vote adds a layer of uncertainty to UPS operations as it heads into the critical peak period, when the amount of packages flowing through its network spikes.
The tentative deal, reached between the company and union leaders in July, faced a persistent campaign from a Teamster faction that objected to a two-tier wage system for drivers and starting wages that will soon trail those offered at Amazon.com Inc.
“Our members spoke loud and clear,” said Sean O’Brien, a Teamster leader in Boston who opposed the deal. “This contract is clearly concessionary and the leadership should listen to the membership and go back and get what our members deserve.”
The contract is one of the largest collective-bargaining agreements in North America and is seen as critical in mapping out the delivery giant’s cost structure at a time when it is delivering more packages than ever due to online shopping.
The creation of a two-tier system would have let the company use lower-paid workers to deliver packages on weekends, curbing delivery costs. The Teamsters leaders said it would also allow package sorters and other workers to graduate to a higher pay rate.
A group opposed to current union leadership, Teamsters for a Democratic Union, argued the weekend-driver position created division among the workforce since people would be doing the same job as a higher-paid package-truck driver at a lower rate.
The opposition seized on news this week that Amazon is raising its starting wages to $15 an hour, highlighting that the proposed UPS contract called for a starting hourly rate of $13 and wouldn’t reach $15 until 2021.
Before the vote tally, a UPS spokesman said the company believed its total compensation package, including health insurance, pension plan, paid vacations and more, makes it competitive.
Write to Paul Ziobro at Paul.Ziobro@wsj.com