The agreement heads off a threatened strike that was twice averted, once by reaching a tentative labor agreement and then a second time by a cooling-off period imposed by Gov. Jerry Brown.
A walkout by operators would have halted AC Transit bus service for 197,000 daily riders who depend on buses for transportation throughout the East Bay and onto the Peninsula and San Francisco.
AC Transit began bargaining with the ATU in March and has readjusted its proposals to keep negotiations on track and minimize the chances for an employee work stoppage.
"This was a long and often intense negotiation and there are no winners or losers in its outcome," said AC Transit General Manager David Armijo. "We are happy we were able to get through the process without any disruption in service, and we thank Gov. Brown for imposing a 60-day cooling off period to help make that happen."
"Clearly, both sides focused on what was best for the riders and taxpayers of this district and what is in the long-term interest of maintaining public transit for the communities we serve," he added.
The contract must now be approved by AC Transit's seven-member board of directors, which will hold its next regularly scheduled meeting on Wednesday, Jan. 8.
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