Key Apple supplier Pegatron has been caught in labor violations which breach its contract with the Cupertino company. Apple has responded by banning the company from all new contracts pending resolution of the problem.

Apple said that Pegatron not only violated the US company’s rules, but did so knowingly, going to ‘extraordinary lengths’ to hide what it had done …

Bloomberg reports that students were allowed to work overtime and nights, which is a clear breach of Apple’s labor rules.

Apple Inc. suspended new business with iPhone assembler Pegatron Corp. after discovering labor violations at a student workers’ program, taking strong action to clean up a Chinese-based production chain long accused of worker abuse.

The Cupertino, California-based technology giant said it discovered several weeks ago that the Taiwanese manufacturer misclassified student workers and allowed some to work nights and overtime in violation of Apple’s Supplier Code of Conduct. Employees then “went to extraordinary lengths” to cover up the violations. It’s since placed its partner on probation until corrective action is completed, the U.S. company said in a statement.

Apple said that Pegatron falsified paperwork in an attempt to evade Apple’s audits of its employment practices.

“Pegatron misclassified the student workers in their program and falsified paperwork to disguise violations of our Code, including allowing students to work nights and/or overtime and in some cases to perform work unrelated to their major,” it said in its statement. “The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms.”

Pegatron blames a single manager.

Pegatron has fired the manager who oversaw the student worker program […]

“Upon discovery of this non-compliant activity, we immediately took the student workers off production lines and worked with our customer and third-party experts to make appropriate arrangements for them to return to their homes or schools with proper compensation alongside all necessary support and care,” Pegatron said in a statement.

The ban will not affect current production as it applies only to new contracts.

It’s not known how the cover-up was discovered, but Apple carries out regular audits of its suppliers, and since 2012 has also invited the Fair Labour Association (FLA) to carry out its own independent audits. The FLA is a collaboration between universities, civil society organizations and companies to help ensure the workers are treated legally and fairly.

Apple has in the past severed ties with companies which deliberately and repeatedly violate its supplier code of conduct. In this case, however, the word ‘suspend’ suggests that Pegatron will be given the chance to fix the problem and put in place measures to ensure it can’t happen again.

Pegatron is second only to Foxconn in its importance in Apple’s supply-chain. The company was previously found to be violating labor laws and rules by a BBC investigation back in 2014. Apple said at the time that it was investigating, but knew of ‘no other company doing as much as Apple to ensure fair and safe working conditions.’

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