Businesses that breach employment standards could be "named and shamed" under Government proposals.
Some employers could also face jail sentences, steep fines, bans on doing business or seizure of equipment.
The options are laid out in a paper released by the Ministry of Business, Innovation and Employment.
Labour Minister Simon Bridges wants to crack down on migrant worker exploitation.
About 17 per cent of employees report that they are not getting one of more of the minimum legal entitlements, including holiday entitlement, minimum wage or having an employment agreement.
The Labour Inspectorate says it is seeing growing evidence of "more serious and intentional" breaches, such as the exploitation of migrant workers and vulnerable groups.
In a discussion document, the ministry proposes a series of tougher sanctions.
It says current penalties - a maximum $10,000 fine for an individual and $20,000 for a company - are not high when used.
Between January 2008 and March 2013, labour inspectors took 69 cases to the Employment Relations Authority, and the average penalty was $2826.
Officials are canvassing opinion on the options, which include naming and shaming businesses that breach standards.
This would be for those who deliberately breach the law with "serious and harmful effects" or those who commit "moderate to serious" breaches. A similar policy was adopted in Britain in 2011.
Another option would extend financial penalties to deter unlawful behaviour and to ensure there is no financial gain from non-compliance.
Fines would also be targeted at individuals to stamp out "phoenixing" - when directors wind up a company and begin another to avoid enforcement.
The ministry also suggests a measure that would restrict the ability of non-compliant companies to do business.
This would include director bans, licence amendments, revocations, disqualifications, seizure of assets or other restrictions.
Criminal sanctions would be reserved for the most serious breaches and could include custodial sentences.
Officials are also suggesting clarifying laws on record-keeping, boosting the powers of labour inspectors and improving information-sharing between government departments.
The report says an information campaign for migrant construction workers is under way in Canterbury.
"Even if workers are aware of their rights and are clear about the pathways to enforce them, they may not exercise them if they fear repercussions," it says.
Bridges wants feedback on the discussion document.
"While the majority of employers in New Zealand comply with the employment standards, there are a concerning number of reports of serious and systemic breaches, which include practices that exploit vulnerable and migrant workers," he said.
"New Zealand's employment standards are not optional, and this Government is committed to stamping out dodgy and deliberate employment breaches."