Another change, signalled earlier this month, would allow the deportation of migrant employers who exploit other migrants within 10 years of the employer gaining residence in New Zealand.
Mr Woodhouse said there was an increasing number of cases in which ``crooked employers'' had taken advantage of vulnerable people from their own community.
"Changing the law to make such employers liable for deportation sends a strong message that the government will not tolerate such behaviour.''
Labour Party immigration spokeswoman Darien Fenton said harsher penalties would send a message to bad employers, but better enforcement was needed to protect vulnerable workers.
"Currently there are only 35 labour inspectors to cover the entire country and just one dedicated immigration officer in Auckland,'' she said.
"Changing the law and increasing penalties will certainly send a message to bad employers. Unfortunately crimes against vulnerable migrant workers will continue without sufficient inspection and enforcement.''
First Union's migrant worker coordinator Dennis Maga said employers who had approval to recruit workers from overseas were not being effectively monitored to ensure they met their obligations.
"Enforcement is also short of the mark, and a commitment to increase the number of labour inspectors and conduct random checks in areas where exploitation of migrants is likely to happen or has been reported by the community is needed.''
The union said changes to labour laws, currently before Parliament, would allow employers to hire migrant workers on inferior conditions to those enjoyed by existing workers on collective contracts.
Employers and Manufacturers Association employment services manager David Lowe said the changes would help protect both workers and employers.
"The new regulations send a strong message that the exploitation of people won't be tolerated in New Zealand. Employers who exploit migrants are putting at risk the operations of legitimate businesses.''
Mr Woodhouse has also signalled he was working with Labour Minister Simon Bridges to review the penalties under the Employment Relations Act.
In the $4-an-hour exploitation case, Mr Woodhouse said the maximum penalty of $20,000 could be too soft.
"I think it's very important to send a signal that being in New Zealand is a privilege and that there is a rule of law in this country that needs to be obeyed,'' he told TVNZ's Q+A this morning.
Mr Woodhouse last week signed off a policy change to encourage exploited workers to come forward. He said he had instructed officials to turn their attention to employers rather than employees.
"What that will mean for the employees is that they'll be able to speak up, confident that they won't be punished, perhaps by deportation or other sanctions.''
He said the role of communication and social media was important.
"It's about making sure that we can get to those workers and cut across the things that sometimes employers are telling them, which are simply not true, about what would happen if they did speak up.''
