The 30-page report titled Nightmare on Sesame Street, highlights production of a new Sesame Street Ernie toy made by K'Nex and being launched by Hasbro in the US and Europe.

The report, visible here, alleges that every labour law in China is violated at the factory. Among the allegations in the report it says:

• Workers making "Ernie" toys are forced to toil 13 to 15 hours a day, from 8am. to 9pm or 11pm, seven days a week, going for months without a single day off. Workers are at the factory 104 hours a week. There are mandatory 19 to 23 ½ hour, all-night shifts before shipments must leave for the US or Europe.
• Employees are systematically cheated of half the wages due them, earning just $36.55 for working an 89-hour week instead of the $77.84 they are legally owed. Management cheats the poor workers of over $100,000 in wages due them each month.
• The workers handle potentially toxic oil paints and solvents without protective gear.
• Dorm conditions are primitive, with eight workers sharing each room, sleeping on narrow double-level bunk beds. Rooms lack water and toilets.
• The cafeteria is filthy and infested with mice. The workers receive a thin rice gruel for breakfast.

Charles Kernaghan, director of the NLC, stated: "The abuse of young toy workers in China will not end unless parents and children demand that Sesame Street, Hasbro and K'Nex immediately clean up the Kai Da factory and take concrete steps to guarantee that the legal rights of the workers will finally be respected. There is absolutely no reason why these powerful toy companies cannot pay fair wages and treat the workers as human beings."

Hasbro owns 50 per cent of K'Nex’ international and 10 per cent of its domestic operations.

K’Nex has responded with its own statement, saying: “We are a family owned company and we are committed to the safety and welfare of children. The Hoida toy factory is ICTI (International Council of Toy Industries) certified, which means that we comply with the highest safety and labor laws in the toy industry. We take the NLC allegations very seriously and as a result we are launching an immediate investigation.”