Find new School (visa sponsor), first! I am not sure about your responsibilities, because you are working without proper documents.

Otherwise, you can stop at Public Security Bureau in Shenzhen, and report your position.

Chinese Police will not grant you any visa, because School mishandled correct procedure. Probably, you'll need to return to your home, and apply for Z at Chinese Embassy.

That is the reason I am suggesting, you should find new visa sponsor first.

In theory, contact SAFEA - State Administration for Foreign Expert Affairs. http://www.safea.gov.cn/english/

In reality - probably very difficult :(

In all probability, the school doesn't have the legal right to hire foreigners either.

Be aware, however, that there's a HIGH likelihood that you'll get booted out of the country for staying and working illegally (if you're lucky, you might just get a fine).

As Icnif77 suggested, get yourself a new job, with a real visa, and then dob in the other school (perhaps anonymously).

There's also ante-corruption sites around that might be interested in hearing that the police are taking bribes... that makes things a different ball-game, and more likely to get things happening (and public!) Ramifications are also a lot bigger - so if you go that route, find a different city/province (country ;p)

  Sorry, wasted answer, misread the question. Errrm, what they said above seems to cover anything I might have to offer. Good luck.

Do you personally know anybody who's been fined or deported for working without a z-visa in a 3rd or 4th tier city ? This all seems like scaremongering to me, especially in the cities where they still have problems finding enough foreigners to hire anyway....

this exact thing happened to a friend of mine. If you have your passport in your hand wait till you get salary and get on an Flight and go home. Your here working illegally. If you do not have a passport, if the school is holding it. Tell them your getting married and need it to go get a never been married from your embassy and leave. If they won't give it to you. Get to your embassy. and get a new one. If you need to wait the best thing to do is report it lost and go to Hong Kong and wait. Everyday you are here without a proper visa is ¥1000 big ones with a max of ¥10000. 

Do not go to the police. you are insane if you do. 

After you are working legally report the bums on Weibo and put them on all the ESL and CFTU blacklists so others don't fall into that same trap as well.  Once you work for them they have you by the short hairs.

     Ask them for more money or you will quit.    If there is a big group of teachers also working with you.   You can tell them to pay you all more or you will all quit.     Meantime,  tis a pain in the ass getting a work visa.     If you are an American and already have  your criminal background, health report,  you dont need to go back to  America.    You can give the school those documents and they have to apply for the work visa for you.   You just would need to eventually register with the local police.    The school needs to get you an invitation letter.   You would need to fill  out an application for the foreign expert teaching certificate, than the school takes all those documents and applies for the z visa, foreign expert permit, and resident permit.    When all that is done by the school.   You cant do it yoursefl.    Than if you are American 99 percent of the time, you can mail it to a friend or agent who works with a Chinese Embassy in America.     Finally,   why not ask the schools to show you their liscense to employ foreign teachers.   Should be called a foreign expert liscense, or ask them to show you a website where they are listed as one of the schools authorizied to hire foreign teachers.     If they cant do this or get snippy with you, chances are they can not provide the work visa.      IN the meantime,  you can do private tutoring, or work in a trade company.   Its not bullet proof but you have better chances of not being caught working illegally until you get your z visa.   I dont think you have to go back to your home country.  NO you dont.

 I am incorrect.    Apparently in the last couple years.    The chinese government is forcing foreingers to go back to their home countries, HK, or Mongolia .    As far as know,     Americans can get the Z visa in America without having to go directly to the Chinese Embassy in America but now they have a stupid law that requires foreigners to get an entry stamp on their Z visas.    A few years ago they didnt enforce this in many places.   Now they are doing it.    They are also making it more difficult to do this in HK.      I find it this very hypercritical and unfair.     Why is it they will issue L visa and F visas no questions asked, but if the person is already here and they want to work legally, they force us to make 3 flights, have no criminal record.      This is totally rediculous.   I think its time we boycott China!

Doubleaa, depends on what province you are located, I am in Shanghai and none of our employees have ever had to go further than Hong Kong to renew their visa or turn F to Z. I do believe it has a lot to do with if a school has the right to hire foreigners. As for the author of this post, sorry for your troubles, sounds sketchy, but do not understand what Iclark would want you to leave China, find a school that is legit, dig and do some research, talk to people especially foreigners who already work for a potential employer, ask them how they were treated.

If they don't pay you, then tell them if they refuse, you will go to the news station and PSB and turn yourself in. The perfect revenge is getting them fined 10k RMB per month that you worked illegally, and the school will also have to pay your repatriation cost.

And actually follow through with your threat.

It depends what it says in Chinese, not what it says in English. They are often very different, and only the Chinese language contract is valid.

If you report it, you will be the one who loses out for working illegally.