Pegatron, which assembles iPads and iPhones at its China factories, is forcing employees to work unpaid overtime in poor working and living conditions, among other violations of Chinese regulations, China Labor Watch said.
"The Pegatron factories are violating a great number of international and Chinese laws and standards as well as the standards of Apple's own social responsibility code of conduct," it said in the report.
Pegatron said in a statement that it would investigate the matter and would take immediate action to correct any violations of Chinese labour laws and its own code of conduct.
"We strive to make each day at Pegatron better than the last for our employees. They are the heart of our business. That's why we take these allegations very seriously," Pegatron's CEO Jason Cheng said in the statement.
Apple, responding to China Labor Watch's latest report, said it had conducted 15 audits at Pegatron facilities since 2007 that covered more than 130,000 workers to ensure safe and fair working conditions throughout its supply chain.
It has been in touch with China Labor Watch for several months and has fixed some issues raised by the organisation, Apple said.
"Their latest report contains claims that are new to us and we will investigate them immediately," Apple said. "If our audits find that workers have been underpaid or denied compensation for any time they've worked, we will require that Pegatron reimburse them in full."
New York-based China Labor Watch said it sent undercover investigators into three Pegatron factories and conducted nearly 200 interviews with workers outside the factories from March to July.
Pegatron's factories in China now employ more than 70,000 workers after it stepped up production of Apple's products as part of the U.S. technology giant's plans to diversify its contract manufacturing partners.
Taiwan's Foxconn Technology Group, which has also been criticised by labour groups for poor working conditions, now makes most of Apple's top products through its flagship unit, Hon Hai Precision Industry Co Ltd.