Aramark
by Philip Mattera
Aramark, one of a handful of companies that dominate the foodservice industry, has a track record filled with controversies over its contracting practices and its labor policies. Some of the biggest scandals, including several reports that the company served maggot-infested food, have concerned its contracts with correctional institutions.
Starting with Vending Machines
Aramark had its origins in a vending-machine company called Automatic Retailers of America (ARA) that was formed in the late 1950s and quickly began buying up the competition. Before long it attracted the attention of the Federal Trade Commission, which in 1964 required it to sell off some of its holdings.
But ARA did not change its acquisitive ways. It went on buying companies involved both with vending machines and other services. In 1972 the FTC issued new allegations of anti-competitive practices and the following year ordered more divestitures and put restrictions on ARA's expansion (82 F.T.C. 1381; 1973 FTC LEXIS 179). In 1974 the company, now known as ARA Services, paid a fine of $50,000 for price-fixing in Georgia.
In 1977 the FTC filed a lawsuit alleging that ARA's acquisition of several periodical distributors was in violation of the 1973 consent decree. The company agreed to divest the properties and pay a fine of $300,000.
By the 1990s ARA, still aggressively buying businesses, focused on foodservice and changed its name to Aramark. Along with major corporate clients such as Boeing and a significant presence at sports facilities, Aramark moved into the growing foodservice market at correctional institutions.
Contracting Controversies
Ohio. In 2000 it was reported that Aramark secretly negotiated with state corrections officials to obtain $1.5 million in additional payments on a pilot contract to provide food services at the Noble Correctional Institution, even though other state officials were recommending that the contract be rebid (Columbus Dispatch, April 8, 2000). In the wake of the controversy, the state decided to return the function to public control (Columbus Dispatch, September 20, 2000). In 2013 Aramark won a foodservice contract for the state's entire prison system, but the following year the company was fined $142,100 for violations that included failing to hire enough employees. More fines followed, including a $130,200 penalty for ongoing problems such as food shortages and a lack of cleanliness.
Georgia. In 2000 the Atlanta Board of Education renewed its contract with Aramark even though a report found that food quality was poor and the goal regarding the number of students getting hot breakfasts was not being met (Atlanta Journal and Constitution, May 18, 2000).
Illinois. In 2003 Aramark agreed to pay $3.1 million to school districts in the state to settle a lawsuit alleging that it failed to take the required step of reducing its fees to account for the value of commodities donated by the U.S. Department of Agriculture. In 2014 there was a spate of complaints about filthy conditions in Chicago's public schools after Aramark was given a contract to supervise custodians.
Pennsylvania. In 2007 the Philadelphia School District took advantage of an early opt-out provision in its five-year contract with Aramark because the company had not lived up to a promise that the district would be able to eliminate a $3.5 million annual operating deficit. In 2012 Aramark agreed to pay $352,000 to settle allegations that it was inaccurately reporting its use of minority subcontractors under a contract with Philadelphia jails.
Michigan. In 2008 a union-backed group published a study accusing Aramark of failing to pass along volume discounts received when purchasing food on behalf of Detroit Public Schools (Detroit News, February 27, 2008). In 2014 the state department of corrections fined Aramark $86,000 for violations of the terms of its foodservice contract and another $12,000 for fraternization between company employees and prisoners (Detroit Free Press, March 12, 2014). Those fines were quietly cancelled, but the problems grew worse. The Detroit Free Press obtained thousands of state documents concerning problems such as maggots in the food being served and the smuggling of contraband by employees. Among the documents was an e-mail message from the state official in charge of the contract saying he was "at my wit's end" because of the problems. In August 2014 the state imposed another $200,000 in fines. A former Aramark worker later filed a whistle-blower complaint alleging that she was fired for objecting to the falsification of records about unhygienic kitchen practices. In 2015 the state terminated Aramark's contract.
Florida. A 2007 audit by the Department of Corrections Inspector General of Aramark's contract to provide foodservice for the state's prisons found that the company was serving fewer meals than anticipated and was using less costly ingredients but was not passing along the savings to the state. Officials later fined the company more than $240,000 for slow meal delivery, insufficient staffing and other violations (St. Petersburg Times, May 13, 2008).
Texas. In 2010 Aramark agreed to pay $1 million to settle a lawsuit brought by the school district of the city of Keller accusing the company of gross negligence in its handling of a contract to manage the district's maintenance department (Fort Worth Star-Telegram, January 20, 2010).
Kentucky. A 2010 audit of Aramark's contract with the department of corrections found "inadequate oversight" and "significant deviations between the contract language and operational practices" while estimating the amount of overbilling by the company at up to $122,000 per year.
New Jersey. In 2013 investigative journalist Chris Hedges reported that Aramark served spoiled food to inmates at prisons in the state.
Labor Controversies
Labor relations have been contentious at Aramark ever since the company moved from a focus on vending machines to more labor intensive activities such as foodservice and janitorial services while seeking to keep down wage rates. Unions gained a stronghold among Aramark's workers, about one-fifth of whom were represented by a collective bargaining agreement by the 1990s, but there were tensions when Aramark won contracts that took work away from unionized employees in the public and private sectors.
In 2004 the Service Employees International Union made Aramark one of its key organizing targets. The union went on to recruit company employees providing janitorial services at facilities owned by firms such as Boeing and Northrop Grumman. SEIU joined with Unite Here in creating the Campaign for Quality Services to oppose the contracting out of public school cafeteria services to companies such as Aramark.
In 2008 Unite Here members in New York City staged work stoppages at corporate cafeterias at Goldman Sachs and other investment banks to support their demands for improved wage and benefit provisions in new contracts. Around the same time, SEIU organized protests of Aramark workers in Houston focusing on issues such as unaffordable health insurance and off-the-clock work assignments (Houston Chronicle, May 9, 2008).
In 2009 Aramark agreed to pay $3.25 million to settle two lawsuits alleging that the company collected administrative fees from customers at two convention centers and Fenway Park in Boston that amounted to tips and should have been distributed to employees.
In 2010 Aramark agreed to pay $3.9 million to settle a class action lawsuit alleging that thousands of its employees were denied meal and rest breaks required under California law and were not paid for all hours worked. Three years later, Aramark Uniform Services agreed to pay $2.75 million to settle another wage and hour case in California.
In 2015 the Office of Federal Contract Compliance Programs announced that Aramark Education Services would pay $165,000 to settle allegations that it discriminated against black and male job applicants at a facility in Texas.
Other Information Sources
Violation Tracker summary page
Watchdog Groups and Campaigns
American Federation of State, County and Municipal Employees
American Friends Service Committe: Investigate
Private Corrections Working Group
Service Employees International Union
Key Books and Reports
Buying Access: How Corporations Influence Decision Makers at Corrections Conferences, Trainings and Meetings (In the Public Interest, August 2015).
Cutting Corners in America's Criminal Justice System: How Corrections Companies Harm Prisoners and the Public in the Pursuit of Profit (In the Public Interest, April 2016).
Food Service Privatization in Michigan’s Prisons: Observations of Corrections Officers by Roland Zullo (Institute for Research on Labor, Employment and the Economy, March 2016).
Hard to Swallow: Did Food Service Contractors Shortchange New Jersey's Schools? by Tom MacDermott (Clarion Group).
Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations (In the Public Interest, December 2013).
Pay to Prey: Governors Facilitate the Predatory Outsourcing of America's Public Services (Center for Media and Democracy, October 2014).
Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class (In the Public Interest, June 2014).
Last updated August 19, 2016