I'm not a dive professional, but hasn't the whole "slave labor" thing already been solved by federal minimum wage? I would think an unpaid employee could simply file a complaint with the U.S. department of labor...
How to File a Complaint - We Can Help - Wage and Hour Division (WHD) - U.S. Department of Labor unless they're volunteering for a nonprofit diveshop or agency...
Before someone responds with the "independent contractor" argument. Here's how the government sees that:
http://www.dol.gov/whd/regs/compliance/whdfs13.pdf
All correct. I have been through these issues myself many times over the entirety of the time I have been instructing.
Instructors are paid a number of ways by the shops for which they work. Some do indeed make minimum wage regularly. Others do not. A very common system is to pay the instructor a certain amount for each completed certification. The shop with which I used to work had just such a system for most of its courses--$35 per completed certification. If you had a weekend class of 8 students, you made $280, which was above minimum wage. If only two students were signed up for that class, though, you got $70--far below minimum wage. It was boom or bust, and you hoped it would even out over time.
The worst example I ever saw was one for which I assisted while still a DM. (My assistance in this class was completely unpaid.) It was a one student Rescue Diver class, back when that class had twelve short dives of increasing difficulty. The instructor worked through the sequence, knowing he was only going to get $35 at the end. After the 11th dive, a thunderstorm arrived, and we had to cancel the 12th dive. The instructor could not work the next day, so another instructor did the 12th dive with the student, and that second instructor got the $35 for certifying the student. Boom for instructor #2'; bust for instructor #1. Tough break, said the original instructor, but that's the system.
Eventually that shop realized how wrong that system was and totally changed to one that consistently paid for the amount of time the instructor put in for instructing--no more boom and bust. In our area, that system is a rarity.
So what can you do as an instructor? You can report the shop, knowing that there will be some minor consequence for the shop, and knowing that you will never work again. As I said in a thread in the Instructor to Instructor forum, I was told by a shop manager not long ago that "instructors are a dime a dozen." Every other week someone is coming to the shop looking for employment. If you don't like the way things are, someone will be teaching in your spot very, very soon.