By Bloomberg
Updated: October 6, 2018 1:22 PM ET

United Parcel Service Inc.’s union ratified a five-year labor agreement for employees — even though a majority of members who voted turned it down.

The 54 percent “no” vote wasn’t enough to block the deal under union rules because less than half the membership turned out to cast ballots, the International Brotherhood of Teamsters said Friday night. With such low participation, two-thirds of workers would have had to oppose the deal for the rejection to be valid.

The lukewarm approval could ratchet up tensions between factions within the Teamsters. It could stoke labor turmoil for UPS as it tries to lower the cost of home deliveries and cash in on booming e-commerce. UPS faces competition from nonunion rivals, including FedEx Corp. and Amazon.com Inc., which is starting its own delivery service.

Both UPS, which is already ramping up operations for the busy year-end holiday season, and the Teamsters said they agreed to meet to discuss the next steps. Only 44 percent of the 209,000 eligible union members voted. With the main agreement ratified, it will be up to the Atlanta-based company to cede on some of the issues that rankled members, said Denis Taylor, the Teamsters’ lead negotiator on the contract.

“The leverage is not there,’’ Taylor said. “Certainly, the company understands they’ve got an issue that they’ve got to deal with.’’

Hoffa Leadership

The popularity of the Teamsters leadership and General President Jim Hoffa has waned. In a 2016 general election, Hoffa barely beat back a challenge from Fred Zuckerman for his post. Zuckerman and the Teamsters for a Democratic Union were vocal critics of the agreement.

Still, six of 36 supplemental agreements that deal with individual local issues were rejected and have to be renegotiated, Taylor said. The full contract package won’t receive final ratification until those side agreements are completed, he said.

“The areas that were rejected are key strangleholds for their operations and they know that.’’ Taylor said.

1991 Change

The Teamsters constitution since 1991 has required more than 50 percent turnout for a simple majority to reject a contract, Taylor said. Before that, it always took two-thirds of votes to shoot down an agreement.

“I don’t particularly like this. It’s not for me to like or not like. It is what the constitution requires,’’ he said. “It’s absolutely not optional.”

A separate deal covering UPS freight workers was rejected with significant turnout and can’t be ratified, the Teamsters said. They will renegotiate the freight contract with the company and hold another vote, Taylor said.

For drivers, the contract ratified by the union leadership creates a new hybrid class of weekend drivers who also load packages and earn less than current parcel drivers. Members also wanted part-time wages to begin at $15 an hour, $2 more than in the contract.

“You would create a permanent underclass of drivers who are paid less money and have fewer rights to do the same job,” said David Levin, a leader at the Teamsters for a Democratic Union.

Home deliveries weigh on efficiency because drivers typically handle fewer parcels per stop than at businesses. UPS plans to spend more than $20 billion in the three years through 2020 on new planes, labor-saving technology and other infrastructure.

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