United Parcel Service said on Sunday that it had reached an agreement with the International Brotherhood of Teamsters to cap severance offers at 7,500 drivers after a dispute over the company's plans to cut its workforce.

Under the agreement, UPS will offer $150,000 for early retirement.

The union has sought to block the package delivery giant's Driver Choice Program, arguing that it was initiated without negotiations in violation of its 2023 labor contract. Those provisions broadly bar UPS from entering into such individual agreements with its drivers, it argues.

UPS announced in January plans to cut up to 30,000 jobs and shut 24 facilities this year as it looks to move away from millions of low-profit deliveries for its largest customer, online retailer Amazon.com.