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Package delivery giant UPS and the Teamsters union Tuesday agreed on a new tentative contract, likely heading off a supply chain meltdown that could have affected virtually every American household — and saving the Biden administration from another rash of bad economic news.

UPS and the Teamsters have been negotiating the contract — which covers more than 340,000 workers nationwide and is the largest private collective bargaining agreement in North America — for three months. The Teamsters had authorized a strike as soon as Aug. 1, which could have left everything from medicine to birthday presents sitting in warehouses undelivered.

Teamsters General President Sean O’Brien cheered the agreement, saying “Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits.”

“We demanded the best contract in the history of UPS, and we got it,” he said.

UPS CEO Carol Tomé called the agreement a “win-win-win” that “continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

One of the primary sticking points in negotiations involved pay rates for hybrid workers who split time between driving delivery trucks and other warehouse duties. They are paid less than full-time delivery drivers, creating what the Teamsters changed was an “unfair two-tier wage system at UPS.”

Under the contract agreement, those workers would be reclassified immediately to regular package car drivers. The five-year tentative agreement also would create 7,500 new full-time jobs and raise pay scales for certain workers.

The contract agreement must still be ratified by its membership, which will vote between Aug. 3 and Aug. 22.

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