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Tuesday, July 14, 2009, 04:05 pm PT (07:05 pm ET)

Apple's image may be tarnished by poor factory conditions

Apple presents an image of quality, but an audit of its factories in mainland China showed that more than half of these weren't paying their workers properly last year.

Following an investigation on Tuesday into many Chinese companies violating recent labor laws, it's now known through Apple's 2009 responsibility progress report that 45 of the 83 factories that built iPhones and iPods in 2008 weren't paying valid overtime rates for those workers that qualified, while 23 of these weren't even paying some of their workers China's minimum wage.

A deeper look at Apple's findings found that about 25 of the 83 also discriminated to some degree against people based on ethnicity, biological issues like disabilities, or political leanings. 22 didn't meet environmental standards, while almost exactly a fifth also had problems with on-site living conditions and safety.

In a few extreme cases, seven factories had been caught having at least at one time hired underage workers, though were weren't more than 25 people involved. Some workers at six factories also had to enter debt to a recruitment agency just to start work and were effectively forced to work to pay off their recruiters.

When contacted by Bloomberg, Apple maintained that it has regularly audited all of its suppliers in China and otherwise since 2007 and that it has actively sought to improve conditions for those contracted and migrant workers most likely to be hurt by labor abuses. The report itself mentions that Apple goes above and beyond inspections performed by other companies and talks to contractors and migrants themselves, also insisting on ways for employees to complain about conditions without fear of retaliation.

Still, bringing these outstanding issues to light underscores a number of labor-related problems in Asia that have dimmed Apple's often heavily polished corporate image up to and including this year. After an unofficial look into sub-par conditions at Foxconn factories producing iPods during 2006, Apple had little option but to conduct its first sweeping audit and clean up widespread problems at the Chinese firm. In Taiwan, where labor laws are more rigidly enforced, Apple has still had to contend with allegations of questionable pay cuts and retaliatory firings at Wintek, which supplies iPhone screens to this day.