Labour inspectors are investigating claims than an Auckland restaurant chain is paying workers $4 an hour.
Employment and migrant worker advocates spoken to by the Weekend Herald say such illegal wages are common in some sectors of the hospitality industry.
The Ministry of Business, Innovation and Employment is looking into complaints about an Auckland restaurant chain allegedly paying an "Indian salary".
Its labour inspectorate started an investigation after a significant number of individual complaints were received. Some workers claimed they got paid $265 a week for up to 70 hours' work.
Workers alleged they did not get holiday pay or sick leave, were required to pay between $10,000 and $20,000 to secure their jobs while obtaining residence, and were kept in overcrowded accommodation for which money was deducted from their wages.
The restaurant chain under investigation was not named.
However, May Moncur, an employment advocate with Employment Disputes Services, said such practices were more widespread than one employer.
She had recently met politicians to raise awareness about the issue.
"Workers are not treated well. This is not just international students, this also includes permanent residents and New Zealand citizens ... working conditions and the pay are simply shocking sometimes."
Labour inspectorate northern manager David Milne says the investigation should serve as a warning to any business owners breaching employment laws.
"Labour exploitation is not welcome in New Zealand and it is totally unacceptable if people are subject to this type of alleged behaviour.
"The ministry will investigate and take action to the full extent available in law."