In its 2016 annual report, the Kuwait Association for the Fundamentals of Human Rights called for "abolishing the current kafala system and replacing it with rules according to international standards".
Qatar on Tuesday became the first of the six-nation Gulf Cooperation Council (GCC) states to end kafala, which prevents workers from moving to a new job before their contracts end without their boss's consent, resulting in a wide range of abuses.
The rights group also expressed concern over the so-called administrative deportation of thousands of foreign workers every year by the interior ministry.
"The Association demands that no foreigner is deported out of Kuwait without a final court order," it said.
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The report criticised the segregation of Kuwaitis and expatriates at public health centres, saying it was discrimination on the basis of nationality.
The Association warned of the growing "language of hatred" against foreigners and expressed concern over racial discrimination in Kuwait.
It criticised the government's crackdown on freedom of expression through arresting bloggers.
Bidoons were born and raised in Kuwait and claim the right to Kuwaiti citizenship, but the government says only around a third qualify for consideration and that the rest hold other nationalities.
But the Association welcomed "favourable" government measures including Kuwait issuing a special law for domestic helpers and legislation to set up a national human rights body.
In July, Kuwait became the first Gulf state to set a minimum wage for its hundreds of thousands of mostly Asian domestic workers.