Apple Computer Supplier Gets Audit of Labor Practices

After a thorough, independent investigation found significant issues with working conditions at three factories in China operated by Apple’s major supplier Foxconn, the Fair Labor Association (FLA) recently secured groundbreaking commitments that will reduce working hours to legal limits while protecting pay, improving health and safety conditions, establishing a genuine voice for workers, and will monitor on an ongoing basis to verify compliance.

The nearly month-long investigation found excessive overtime and problems with overtime compensation; several health and safety risks; and crucial communication gaps that have led to a widespread sense of unsafe working conditions among workers. [WCx]

“The Fair Labor Association gave Apple’s largest supplier the equivalent of a full-body scan through 3,000 staff hours investigating three of its factories and surveying more than 35,000 workers. Apple and its supplier Foxconn have agreed to our prescriptions, and we will verify progress and report publicly,” said Auret van Heerden, President and CEO of the Fair Labor Association, a coalition of universities, non-profit organizations and businesses committed to improving the health, safety, fair treatment and respect of workers worldwide.

FLA’s investigation found that within the last 12 months, all three factories exceeded both the FLA Code standard of 60 hours per week (regular plus overtime) and the Chinese legal limits of 40 hours per week and 36 hours maximum overtime per month. During peak production periods, the average number of hours worked per week exceeded 60 hours per worker. There were periods in which some employees worked more than seven days in a row without the required 24 hours off.

Foxconn has committed to bring its factories into full compliance with Chinese legal limits and FLA standards on working hours by July 2013, according to its remediation plan in FLA’s report. The supplier will bring working hours in line with the legal limit of 49 hours per week, including overtime. This means a reduction in monthly overtime hours from 80 to 36, and would be a significant improvement given that most of the technology sector is struggling to address excessive overtime.

More importantly, while employees will work fewer hours, Foxconn has agreed to develop a compensation package that protects workers from losing income due to reduced overtime. In order to maintain capacity while reducing workers’ hours, Foxconn committed to increase its workforce significantly as it builds additional housing and canteen capacity.

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.

According to FLA’s worker survey, 64 percent of employees say that compensation does not meet their basic needs. FLA will conduct a cost of living study in Shenzhen and Chengdu to assist Foxconn in determining whether worker salaries meet FLA requirements for basic needs, as well as discretionary income.

FLA observed other serious issues in areas such as health and safety, worker integration and communication, treatment of interns, and China’s social security enrollment, among others.

A considerable number of workers feel concerned about the protection of their health and safety. More than 43 percent of the workers report experiencing or witnessing an accident. These accidents range from hand injuries to factory vehicle accidents. Foxconn has committed to be more inclusive of workers in health and safety monitoring and decisions.

Until now, Foxconn only recorded accidents that resulted in a production stoppage. Beginning immediately, Foxconn committed to require supervisors and workers to report all accidents resulting in an injury.

Many of Foxconn’s health and safety problems, including blocked exits, lack of or faulty personal protective equipment and missing permits were immediately corrected during the course of the investigation. FLA found that, one year after the Chengdu explosion, Foxconn had improved operating procedures, measurement, and documentation to reduce risks related to aluminum dust where Apple products are made.

The assessment also found that the union at Foxconn is dominated by management representatives and does not provide true worker representation. In keeping with local laws, Foxconn has agreed to ensure elections of worker representatives without management interference.

FLA also secured agreement by Foxconn to find alternative ways to address low enrollment in social security benefit programs and to adapt its internship program to ensure that interns enjoy the protections necessary for a productive, healthy and safe educational experience.

“If implemented, these commitments will significantly improve the lives of more than 1.2 million Foxconn employees and set a new standard for Chinese factories,” van Heerden said.

Following the FLA’s methodology, independent assessors logged more than 3,000 staff hours inside the factories. They evaluated conditions based on visual observation and review of policies, procedures and documentation (payroll and time records, production schedules, employee records); interviewed hundreds of Foxconn workers and managers both on- and off-site; and conducted an anonymous worker perception survey of 35,500 randomly-selected Foxconn workers which provides an in-depth understanding of working conditions, particularly during peak production of Apple products.

Under FLA rules, its assessors have unfettered access to conduct thorough investigations of Apple suppliers. This investigation of three Foxconn factories at Guanlan, Longhua, and Chengdu, in China is the beginning of FLA’s in-depth, thorough examination of the entire operation to assess whether workers’ rights and labor standards are being respected throughout Apple’s supply chain.

"Joining the Fair Labor Association is voluntary. But once a company joins, FLA sets the rules of investigations and has full access to any supplier, owns the information collected and publishes its findings and recommendations for remedial action,” van Heerden said.

In addition to follow up studies related to this first investigation, FLA will verify Apple’s and Foxconn’s implementation of their remediation plans and will report publicly on progress. [WCx]

A full copy of the report is available at www.fairlabor.org/transparency/complaints-investigations.

Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He is an editor and contributor to Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: Info@ReduceYourWorkersComp.com.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

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