Dozens of Chorus subcontractors rolling-out ultra fast broadband have breached minimum employment standards.
An investigation by the Labour Inspectorate has found 73 subcontractors in Auckland failed to keep employment records, pay the minimum wage and provide employment agreements.
Labour Inspectorate national manager Stu Lumsden said the breaches involved immigrant workers.
"In a number of cases it was found that contractors deliberately used practices such as 'volunteering' or extended trial and training periods without pay," he said.
He said it was disappointing a project of this size had failed to ensure basic employment standards.
"Many of these employees represent a vulnerable section of the New Zealand workforce that often aren't aware of their minimum employment rights and are concerned with their visa status," he said.
Workplace Relations Minister Iain Lees-Galloway said the behaviour was not acceptable.
"This activity is in breach of minimum employment standards required by law, it is clearly exploiting migrants, and it is a timely reminder why the government is strengthening employment law to protect vulnerable workers," Mr Lees-Galloway said.
"It is bad for workers, it is bad for our reputation and ultimately, bad for our economy," he said.
E tū union spokesperson Joe Gallagher said the practice was alarming, but not surprising.
"We have known about the effect of this contracting model since they started it," he said.
Mr Gallagher said Chorus needed to shoulder the responsibility.
A spokesperson at Chorus said the company was "disappointed' by the findings of the investigation.
The company had no further comment until after it meets with the Ministry of Business, Innovation and Employment tomorrow.