I have only been at my current place of employment less than a year, and I found the owner of the company (my boss) in violation of several labor and wage laws, including the Equal Opportunity Act. [Ex: At one point, while looking through resumes for new hires, he directly told me to "Pull out any that sound black or Muslim. We don't hire /those/ people."] When I refused to comply with these illegal practices, he told me that he was going to fire me for not following orders and has since then begun looking for my replacement. I reported him to the Labor and Wage department regardless, and while he hasn't found out yet, I have begun looking for a new job.
How do I explain to prospective employers why I'm leaving this job after such a short stay without it sounding like I'm bad-mouthing my boss? I know it looks terrible leaving a job after such a short amount of time, and I don't want this to affect my employment ability in the future. What do I do?

Just say you are looking for better opportunities.

If you sound bitter or just mean in any way about your previous employer they will avoid you like the plague.

People that come across as combative or malcontents are dismissed from consideration very quickly... its legal, done every day and there is nothing you can do about it. You won't get a chance to explain or even know that was why.

Best to keep the whistleblowing incident to yourself and don't share it with any future possible employers.

Since most companies violate some laws (even if minor) I would not mention the whistle blowing to any other company. This is about the sure way of never finding a job. Also to be honest, unless you have him recorded saying that, and/or have it in writing, reporting him will only get you fired, since there is no real proof of it.

Don't include this employer in your resume at all. No one will know unless you tell them you even worked there.
Explain the gap by saying you took a vacation or took care of a sick relative.