Apple has admitted its supplier Foxconn has used too many temporary workers at an iPhone factory in central China.
China Labor Watch also said it had its investigators working inside the factory in Zhengzhou, which makes around half of the iPhones produced worldwide, to assess working conditions inside the plant run by Taiwan electronics company Foxconn.
It claims the Zhengzhou Foxconn factory is trying to save money by hiring "dispatch" or temporary workers, hired mostly in peak seasons and offered bonuses as an incentive. But US-based CLW says many workers were "cheated out of bonuses."
By this August up to half the workforce were dispatch workers, says CLW, though the legal maximum in China for such workers is 10 percent.
China Labor Watch also claims a large number of high school students work at Zhengzhou Foxconn, with conditions the same as for regular workers including overtime.
"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," said Li Qiang, executive director of China Labor Watch.
But iPhone creator Apple said it had looked into the claims and found most allegations to be false.
"We have confirmed all workers are being compensated appropriately, including any overtime wages and bonuses," Apple said. "All overtime work was voluntary and there was no evidence of forced labor. We did find during our investigation that the percentage of dispatch workers exceeded our standards, and we are working closely with Foxconn to resolve this issue."
The CLW report also says "verbal abuse is fairly common at the production site," and while workplace injuries are rare managers will "often trick workers into hiding the truth" when accidents happen.
Zhengzhou has been a Foxconn manufacturing hub for years.
Foxconn employs more than a million workers in the mainland, making it the largest private employer in China. It came under the spotlight several years ago with allegations of employee suicides and the use of underage interns at its factories.
In August, Foxconn admitted it had found cases of employed high school students working overtime illegally making the Amazon Alexa devices at its Hengyang factory.