The label's first album, Folk the Banks, is slated for release in mid-March featuring artists including Ani DiFranco, Tom Morello, Sam Duckworth and Billy Bragg.
However, the album will not be released on Apple's iTunes platform or through the Amazon retail website, two of the biggest distributors of music that control 80% of the digital download market.
Occupation Records said that the decision was "not just because of the lack of competition and control these dominant global market players hold", but primarily down to their alleged "labour and human rights violations".
The label is also challenging the music industry to develop more "ethical and transparent" ways of doing business that "values people - employees, artists and consumers - more than profit".
Occupation Records artist and industry relations manager Adam Jung said: "Just as the music industry has the potential to help spread the message of Occupy, the Occupy movement has some messages to bring to the music industry.
"Occupy is about opening up a space for dialogue about inequalities and working towards real alternatives benefiting for all - it's already having affects here in the UK with politicians fighting over themselves to say what we've been saying - and we aren't finished by a long shot, whether evicted from St Paul's or not.
"With Occupation Records entering the music industry, that guiding ethos made us question whether our initiative should be 'business as usual' or the 'medium is the message'. For us, the choice was clear."
Occupation Records has published a blog which features various allegations of violations in the manufacturing and logistics supply chains of Amazon and Apple.
Apple is currently under the spotlight over conditions in its worldwide factories, including a demonstration staged at various flagship Apple stores last week over the alleged violations.
The Fair Labour Association (FLA) is to audit several of Apple's suppliers at the request of the iPhone firm, including China's Foxconn, following a series of accidents and incidents at the technology production giant's plants in recent years.
Occupation Records noted previous reports that tight deadlines in Apple factories had left some workers "threatening mass suicide". It said that Apple's own supplier progress report admitted that at over 90 facilities assembling Apple products, over half of workers "exceeded weekly working hour limits of 60", while 108 facilities had not paid proper overtime to employees.
The organisation further noted that Amazon's Kindle devices are also produced at plants operated by Foxconn, meaning the firm is "directly guilty of ignoring or outright opposing labour rights in the UK and US".
Referring to a report in US regional newspaper The Morning Call, the label claimed that Amazon has also allowed harsh working conditions to occur in its US distribution network.
"The Amazon.com warehouse in Lehigh Valley, Pennsylvania is the very definition of a sweatshop with employees forced to work 11 hour shifts in temperatures up to 110 degrees Fahrenheit (43 degrees Celsius) with one unpaid hour long lunch break, and two breaks of 15 minutes," it said.
"Workers reported people passing out at the water fountain, workers being carried out on stretchers and wheelchairs - by paramedics Amazon hired to park outside.
"In one day 15 employees collapsed. Conditions are so bad the local hospital called federal regulators to alert them of the number of patients coming from the warehouse."
Occupation further accuses Amazon of punishing employees for taking sick days, employing a firm for a "union busting campaign" and not improving working conditions within its distribution and supply chain for "ten years".
"Rather than side stepping this ethical dilemma, to remain true to Occupy, we feel it is important to make tough decisions as well as address and challenge the stark realities of the music industry," added Adam.
"For our part, Occupation Records will not distribute through Apple's iTunes or Amazon until these companies begin to value people over profit, and we call on the music industry to join us. Let's occupy the music industry.
"The music industry has previous helped to ensure that merchandise is ethically manufactured and sourced, and can also claim a victory when they forced Apple to offer DRM free content. There is no reason they couldn't force both Apple and Amazon's hands on human and labour rights."