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In the workplace, the exploding use of computer networks, e-mail and the Internet, and other digital technologies have made it easy for companies to monitor their employees. And a growing number of employers are starting to keep tabs on workers. But the results can lead to serious problems for management and labor.

DRAWING THE LINE between protecting corporate interests and respecting worker privacy has never been harder. Many companies decide it's in their best interest to permit a reasonable amount of personal use of company phones and email. But firms can be sued if their employees use the company's e-mail or Internet access to bring offensive material into the workplace. Technology makes it possible to keep close track of employee activities, even down to the individual keystroke. But in an era of tight labor markets, companies have to balance vigilance against the spectre of Big Brother. Jack Sheehan is a spokesman for Twin Cities based General Mills, which tells employees their e-mails and web use may be subject to monitoring.

Many employment attorneys say companies are generally reluctant to spy on employees. But as the potential perils of the Internet age come into clearer focus, electronic monitoring of employees is spreading, according to an American Management Association survey.
Sheehan: We would not want the perception among employees that their every single move is being watched. Nobody wants to work under conditions like that, and certainly we don't want to do that at General Mills. However, if it is in our interests, in the business interest, we have the capability and the right, if we so desire, to pay closer attention to what people do on e-mail and on the Internet.

Monitoring may discourage inappropriate use of electronic communications, but it can also cause a chain reaction of unexpected consequences. Kenneth Goodpaster, Koch Professor of Business Ethics at the University of St. Thomas found a company willing to divulge its experience in exchange for anonymity. Using the alias "Waterbee Toys," Goodpaster turned the company's story into a case study for students. Concern about preserving trade secrets led the company to begin tracking employee use of the Internet. Goodpaster says no security concerns emerged after the first week.

Goodpaster: Much to their surprise, there were significant number of employees who were accessing sites that were inappropriate, either because they were pornographic, or because they were objectionable in other ways. And in particular, there was one employee who apparently had been logged on for eight solid hours in one day, from the beginning of the day to the end, to a clearly pornographic site, and the site was clearly spelled out on the printout.

Personal Web surfing on company time appears to be on the rise. One survey conducted by a firm that makes tracking software, suggests workers' non-work-related surfing rose from 15 to 30 percent of total Internet use in the last year. At Waterbee Toys, Goodpaster says the revelations about workers' web browsing led security officials to reverse course and argue for scrapping the monitoring. They said there wasn't enough of a security risk to justify what they were finding out. But Goodpaster says they could not turn back.

Goodpaster: The corporate general counsel saw in this a kind of danger that hadn't even crossed their minds.

The computer logged on to the pornographic Web site was potentially visible to other employees. Goodpaster says the company could not just ignore a situation that could open the firm to charges of creating a hostile work environment.

Goodpaster: Once they caught problems that were arguably illegalities, or potentially so, then simply deciding we're not going to monitor anymore, with the knowledge that these activities were going on, would have put the company in a very precarious position had there been a lawsuit.

Waterbee Toys fired the worker with a taste for pornography -- someone who had been in good standing -- and decided to continue keeping tabs on Internet use for the time being. Waterbee is not alone. Xerox installed a new monitoring system this spring and has fired at least 40 employees for looking at pornographic Web sites while on the job.

John Roberts, an attorney in Minneapolis says companies are often shocked by what they uncover. He says he's worked on a case in which a company's engineers were casually sending their software ideas to the competition's engineers in e-mails.

Roberts: These engineers, we talked to them, good solid people, people who were all top performers. They said, "Well, you know this is a hundred lines of code out of a ten million line system. Who cares?" And, "Yeah, we trade stuff all the time." And they never thought about the implications, the proprietary rights, the patent rights, the copyright, trademark, trade secret issues that went along with that.

Many employment attorneys say companies are generally reluctant to spy on employees. But as the potential perils of the Internet age come into clearer focus, electronic monitoring of employees is spreading, according to an American Management Association survey, In two years, the percentage of companies saying they check employee e-mail, computer files and phone calls grew ten points to 45 percent, much of that from a sharp increase in e-mail tracking. A host of companies offering monitoring software is trying to capitalize on the trend, confident it will continue.

Kramer: I think it's a phenomenal business opportunity.

Matt Kramer is with Twin Cities-based Control Data Systems. The firm sells a service that allows companies to analyze their e-mail traffic. He says it can cost as little as 50 cents a month to keep an eye on one e-mailbox or address. And worldwide, the number of e-mailboxes in use grows at rates exceeding 200 million per year. Matt Kramer.

Listen Here:

Gregg Corwin, secretary-treasurer, Labor & Employment Law Section, Minnesota State Bar Association explains why employers monitor the activities of employees. (1:12)

Evan Hendricks, editor of Privacy Times has advice for employees. (1:32)

Richard A. Ross, chair of the Employment and Labor Group, Fredrikson & Byron says employers are reluctant to spy on employees. (:24)

Kramer: When you look at companies use of e-mail and their concern about how e-mail is used or could be used, both from a positive and potentially negative standpoint, this is a fantastic business segment to be in.

Many offices are full of technology with security features like passwords and user ID's that convey the illusion of privacy, But voicemail or e-mail passwords do not bar company administrators. Minneapolis attorney Marshall Tanick says the walls of privacy are crumbling because technology has made it easier for employers to snoop.

Tanick: I've had at least a half dozen cases where people have had voice mail messages that the employer has overheard that have led the person to get into trouble. For instance, in one case there was a call from a prospective employer soliciting this person to seek work at a competitive company and it was left on a voice mail and the employer overheard it and took action against the person.

Many employment attorneys say companies should tell workers they may be monitored largely because that makes it harder for someone to claim an invasion of privacy. The American Management Association survey found that most companies do inform their employees, but notification about e-mail and voice mail surveillance actually declined in the last year. Last month, California governor Gray Davis vetoed a bill requiring companies to tell workers about e-mail monitoring.

On the other hand, the Minnesota Supreme Court recognized a right to privacy for the first time last year, but it remains unclear what practical effect this ruling will have in the workplace.

If the law is unclear, the technology leaves little room for doubt. Matt Kramer of Control Data Systems says any sense that e-mail, for example, is private is an illusion.

Kramer: I can take my machine, I can take it out in the parking lot, I can run over it in a car, I can throw it in the bottom of a swamp, never to be recovered again, and it still doesn't matter. Because copies of the e-mail I sent to other people are sitting on servers all over the world.

Kramer ends with a warning: never write an e-mail you'd regret seeing on a billboard, with your name on it.