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Watchdog Group Alleges Labor Violations In iPhone Manufacturing; Apple Says Report Mostly False

Jayson Derrick

Apple Inc. (NASDAQ: AAPL) responded to a China Labor Watch report Monday, saying that "most of the allegations" of Cupertino violating Chinese laws are false, CNBC reported.

What Happened

New York City-based CLW said in a report over the weekend that it has evidence the upcoming iPhone 11 is being illegally produced at Foxconn facilities in China.

The watchdog group said the percentage of dispatch or temporary workers at Foxconn facilities make up more than 50% of the entire workforce. Chinese law dictates this percentage can not exceed 10%.

"Apple and Foxconn know that the issue with dispatch workers is in violation of labor laws, but because it is profitable to hire dispatch workers, they haven't addressed the issue. They have allowed these violations to continue over the years," Li Qiang, executive director of China Labor Watch, said in the report. 

Other allegations raised by CLW include improper pay, refusal to accept resignations and forced and unpaid overtime work, among others.

Apple: Most Allegations Are False

Apple said in a statement obtained by CNBC that some of the allegations raised by CLW are true, but it did not state which ones. The company said the allegations of unfair pay, including overtime and bonuses, are false, and said there is no evidence of forced labor.

Apple acknowledged the percentage of dispatch employees exceeds the limit and it is "working closely with Foxconn to resolve this."

Apple's supply partner Foxconn said in a separate statement that it did identify "some" compliance issues. Foxconn said some dispatch employees carried out overtime work for which they were paid, and while it was "always voluntary," it is not consistent with company rules.

"We will not hesitate to take any additional steps that might be required to meet the high standards we set for our operations," Foxconn said. 

Apple shares were trading higher by 0.79% at $214.94 at the time of publication Monday. 

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Photo courtesy of Apple. 

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