Yellow Corp. Workers May Get Paid by July After 3-Year Wait

When will former Yellow Corp. employees receive their vacation and sick pay?

Former Yellow Corp. employees could receive payment for unused vacation and accrued sick leave by June or July 2026, almost three years after the LTL carrier shut down in August 2023. A federal bankruptcy court in Delaware approved a final liquidation plan in November 2025, classifying employee claims as priority and requiring them to be paid from the proceeds of Yellow's asset sales. The transition to a liquidating trust is now expected within the next two months.

But the payout is not yet certain. The Teamsters and Yellow have not reached a settlement on the value of the claims, and other creditors can still object to any deal the bankruptcy court approves. Yellow's largest shareholder, hedge fund MFN Partners, appealed a pension withdrawal liability settlement, though the Teamsters memo said the final bankruptcy plan can still move forward despite the appeal.

What claims are still in dispute?

"Throughout 2025 and 2026 the Teamsters have engaged with Yellow in settlement negotiations related to the Union's contract-based claims against Yellow," the Teamsters said in a Wednesday memo to Yellow's local unions. "These claims include accrued and unused paid-time-off as well as individual and group grievances. While substantial progress has been made on agreeing to the amounts of these claims that should be allowed, there are a few disagreements on valuation that still must be resolved."

The liquidating trustee, who takes control once the transition occurs, will be responsible for resolving remaining claims and making distributions to creditors, including former employees. The bankruptcy court must approve any settlements reached between the Teamsters and the trustee. Other creditors of Yellow's estate retain the right to object to any settlement or appeal any settlement the court approves.

Why the three-year delay?

Yellow ceased operations in late July 2023 and filed for bankruptcy days later. The company's asset sales took months to complete, and the bankruptcy court did not approve the final liquidation plan until November 2025. Employee claims were classified as priority under that plan, meaning they must be paid before general unsecured creditors receive distributions.

The delay in paying workers reflects the complexity of unwinding a carrier that operated 12,000 tractors and 35,000 trailers across hundreds of terminals. Yellow's bankruptcy estate has been negotiating with multiple creditor groups, including pension funds, secured lenders, and the Teamsters, over the value and priority of competing claims. The MFN Partners appeal of the pension settlement added another layer of uncertainty, though the Teamsters memo indicated the appeal does not block the liquidation plan from moving forward.

What this means for former Yellow workers

Former Yellow employees who are owed vacation pay, sick leave, or grievance settlements should expect to hear from the liquidating trustee by late summer 2026 if the transition occurs on schedule. The trustee will contact claimants with instructions on how to submit or verify their claims. Workers who have moved on to other carriers or left the industry should ensure the trustee has current contact information.

The amount each worker receives will depend on the final settlement between the Teamsters and the trustee. If the parties cannot agree on valuation, the bankruptcy court will decide. Workers should not expect full payment immediately after the transition, as the trustee must first resolve remaining disputes and obtain court approval for any settlement.

For small fleets that hired former Yellow drivers or dock workers, the payout could affect retention. Drivers who receive a lump sum for unpaid vacation or sick leave may use the money to buy equipment, pay down debt, or take time off. Fleets that rely on former Yellow employees should plan for potential turnover or time-off requests in the second half of 2026.

The broader LTL shakeout

Yellow's collapse removed roughly 30,000 shipments per day from the LTL market in August 2023. Surviving carriers absorbed most of that volume within six months, but the capacity overhang from Yellow's terminal and equipment sales has kept LTL spot rates under pressure. XPO's Q1 LTL tonnage and yield both climbed as the carrier captured former Yellow lanes, while Saia spent $2 billion on network expansion to handle the volume shift.

The liquidation of Yellow's estate marks the final chapter of a bankruptcy that reshaped the LTL sector. For the 30,000 workers who lost jobs when Yellow shut down, the June or July payout will close a three-year wait for money they earned before the carrier collapsed.