Immigration Minister Michael Woodhouse said there had been recent examples of exploitation in the Christchurch construction industry and Queenstown tourism industry.
He said the immigrants concerned were working in New Zealand legally.
Mr Woodhouse told Parliament it was already an offence to exploit people who were not entitled to work in the country, and this legislation extended protection to people holding temporary visas.
Under the Immigration Amendment Bill (No 2) employers face up to seven years in prison and/or a $100,000 fine if they break the law.
There were also several changes to strengthen border control, Mr Woodhouse said.
These included making it easier to access information about passengers who may pose a security risk.
The Government would also be able to seek a court order enabling police to use "reasonable force" to take biometric information from people set for deportation.
Biometrics can include eye scans, fingerprints and DNA samples.