The United Auto Workers union has agreed to a new four-year labor deal covering Fiat Chrysler's 40,000 workers at 23 U.S. factories.
The deal offers the first raises in nine years and gradually raises wages of newly-hired workers to the same level as company veterans.
The two-tier wage system has been in place since the firm emerged from bankruptcy in 2009, during the global financial crisis that slashed auto sales.
Union members voted to approve the new deal after a previous contract offer was soundly defeated because it did not close the wage gap.
The union plans to use the Fiat Chrysler deal as a pattern in talks with two other larger U.S. automakers, General Motors and Ford.
Some information is from Reuters, AP and AFP.