The Illawarra's pubs, bars and taverns have the lowest workplace law compliance rate in the state.
Just 38 per cent of the region's drinking hot spots audited by the Fair Work Ombudsman were found to be adequately following workplace requirements, compared with 70 per cent statewide.
Only five of the 13 Illawarra businesses audited were deemed to be compliant.
One Wollongong establishment, which the ombudsman declined to name, was found to have inadvertently underpaid two of its workers to the tune of $139.
The money was voluntarily back-paid.
Fair Work Ombudsman spokeswoman Natalie James said the majority of businesses in contravention had incurred minor breaches for small underpayments.
She noted the Wollongong company had since put processes in place to ensure its ongoing compliance.
"The breaches discovered in the Illawarra were inadvertent and the result of employers not being fully aware of their obligations under workplace laws," she said.
The Illawarra results were part of a national campaign undertaken by Fair Work to check the books of nearly 400 pubs, bars and taverns and 350 accommodation providers across the country.
Statewide, of the 264 audits completed, 191 businesses (72 per cent) were found to be compliant while 74 (28 per cent) had non-compliance issues.
More than 30 businesses were found to have underpaid employees, totalling $83,504 in unpaid entitlements.
Ms James said some of the audited businesses were selected at random, while others were chosen as they had previously come to Fair Work's attention.
But she told the Mercury inspectors had found the majority of employers did the right thing by their staff.
"A key role of the [ombudsman] is to educate employers about their obligations and to assist them to get it right, particularly time-poor small business operators who don't have the benefit of in-house payroll and human resources staff," she said.
"That's what we did when we visited these businesses - we worked with them to ensure they understood their obligations in terms of things like pay and record-keeping obligations, and helped them put processes in place to ensure compliance in the future."
As part of the campaign, the ombudsman wrote to 24,000 pubs and bars nationally, alerting them to a free website providing information to employers in the hospitality industry.