FLA-led Foxconn audit finds violations, fixes promised

The first report on Foxconn's Chinese factories from the Fair Labor Association says the Apple manufacturer violated standards in working hours and compensation, but plans to make changes to fix those things.

Josh Lowensohn Former Senior Writer
Josh Lowensohn joined CNET in 2006 and now covers Apple. Before that, Josh wrote about everything from new Web start-ups, to remote-controlled robots that watch your house. Prior to joining CNET, Josh covered breaking video game news, as well as reviewing game software. His current console favorite is the Xbox 360.
Josh Lowensohn
4 min read
Workers depicted in Apple's 2011 supplier responsibility report.
Workers depicted in Apple's 2011 supplier responsibility report. Apple

The first results from the Fair Labor Association's audit of Foxconn have revealed violations in wages and overtime, conditions that the Chinese manufacturing giant has pledged to remedy.

The audit, which was posted to the FLA's Web site this afternoon, found all three factories in the region to be in violation of both the labor organization's code standard, and Chinese law in hours worked by employees. The FLA said these factories "exceeded" 60 hours per worker, which Foxconn has now said will be scaled back to 49 hours per week by July 1, 2013.

Foxconn manufactures gadgets for numerous technology giants from Apple to Hewlett-Packard. This particular audit came at Apple's request, and is the first in a much larger effort to evaluate working conditions in Apple's supply chain.

Along with the overtime, the FLA noted that more than 60 percent of workers at three of Foxconn's facilities felt they were not being paid enough to "meet their basic needs." The FLA said it's following up with a study to determine the cost of living in Shenzhen and Chengu where those factories are based.

"Apple and its supplier Foxconn have agreed to our prescriptions, and we will verify progress and report publicly," said Auret van Heerden, the FLA's president and CEO, in a statement.

"We appreciate the work the FLA has done to assess conditions at Foxconn and we fully support their recommendations," Apple said in a statement. "We think empowering workers and helping them understand their rights is essential."

Alongside the other concerns, the FLA said that it found 14 percent of workers were not being paid enough for unscheduled overtime, and that Foxconn had a system in place that would keep workers from being paid for overtime:

FLA also discovered that 14 percent of workers may not receive fair compensation for unscheduled overtime. The assessment found that unscheduled overtime was only paid in 30-minute increments. This means, for example, that 29 minutes of overtime work results in no pay and 58 minutes results in only one unit of overtime pay. Foxconn committed to pay workers fairly for all overtime as well as work-related meetings outside of regular working hours. In addition, FLA secured agreement from Foxconn and Apple to retroactively pay any worker due unpaid overtime. The companies are currently conducting an audit to determine the payments due to workers.

The first report of many
The results are the first from a considerably larger audit of Apple's suppliers and manufacturing partners.

Apple joined the FLA, a group known for addressing sweatshop conditions in the apparel industry, in January. The group was started by universities and nonprofit groups, and companies such as Nike as a way to address sweatshop labor abuses.

The FLA began its investigation of Foxconn last month. Other companies from Apple's supply chain that are still in line for audits include Quanta and Pegatron. As part of those investigations, the FLA said it would interview "thousands of employees" about their working and living conditions, as well as inspecting factories for any potential violations of health and safety. This first round was based on 3,000 staff hours of investigation and surveys of more than 35,000 workers who were randomly selected, the FLA said.

The FLA investigation was originally planned as part of a larger audit of Apple, and was moved ahead of schedule primarily due to a New York Times investigation highlighting often brutal working conditions and sometimes deadly safety problems at Foxconn.

For its part, Apple has published a supplier responsibility report annually since 2007, detailing issues found in its supply chain. Last year's report, published in early January, included the results of more than 200 audits at supplier facilities.

Even before the FLA report's release, Apple critics were ready to dismiss the findings. The FLA has been criticized for being too cozy with its corporate partners. And those concerns were raised again after Apple joined the group and commissioned the FLA audit.

In a statement about today's report, Scott Nova, executive director of the labor rights watchdog group Workers Rights Consortium, added his skepticism.

"Apple and Foxconn have been promising to end labor rights abuses like excessive overtime since 2006," Nova said. "It would be reasonable for consumers concerned to ask why they should believe this new round of promises when the previous ones proved empty."

Debby Chan Sze Wan, the project officer with Students and Scholars Against Corporate Misbehavior, had similar sentiments about the report:

SACOM and other labour groups have been uncovering the problems at Foxconn in Chengdu, Zhengzhou and Shenzhen, the suppliers to Apple, in the past 2 years. And Apple has also conducted audits. Therefore, the labour rights violations stated in the report have been mentioned a long time ago. Apple simply ignored those issues. Now, Apple has finally conceded the problems of excessive, overtime, underpayment, poor work safety, absence of genuine trade union. If Apple can listen to the critique by the NGOs and media, these problems could have been resolved.

As for Apple's involvement in making sure those changes happen, its bound by the FLA's remediation policy to resolve whatever maladies are found during the auditing process. Apple has also stated on its own supplier responsibility site that it will "terminate the relationship" of any violations the company finds "egregious" or that the supplier is "incapable of preventing."

CNET senior staff writer Jay Greene contributed to this report.

Updated at 1:45 p.m. PT with additional information, and once again at 5 p.m. with comment from Apple.