Business News Daily receives compensation from some of the companies listed on this page. Advertising Disclosure
BND Hamburger Icon


BND Logo
Search Icon
Updated May 27, 2024

Spying on Your Employees? Better Understand the Law First

Employee monitoring technology is becoming more common in the workplace. Before you install it, know the laws surrounding its use.

author image
Max Freedman, Business Operations Insider and Senior Analyst
Verified Check With BorderEditor Reviewed
Verified Check With Border
Editor Reviewed
This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

Table of Contents

Open row

Businesses try to improve productivity in various ways, including eliminating workplace distractions and automating processes. Surveillance and tracking software are other methods employers use to improve operations. 

Employee monitoring technologies have become more prevalent in recent years, especially as the rapid growth of digital technology has streamlined surveillance platform use. However, workplace privacy is also a top priority. If you plan to use employee monitoring technology, it’s crucial to understand how federal and state laws affect it and the best ways to implement these tools at your business.

Editor’s note: Need employee monitoring software for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

What is monitoring in the workplace?

Employee monitoring refers to the methods employers use to surveil their workplaces, including staff members’ whereabouts and activities. With employee monitoring, businesses aim to accomplish the following goals: 

  • Prevent internal theft
  • Examine employee productivity
  • Ensure company resources are being used appropriately
  • Provide evidence for potential litigation

Employee monitoring methods include the following tools: 

  • Employee monitoring software: The best employee monitoring software shows managers how employees spend their work time. Functionality can include browser and application tracking, user activity screenshots and keystroke logging. 
  • Time and attendance software: The best time and attendance software gives your business a record of when employees work and take paid time off. These records are valuable for payment calculations and as evidence if there’s a dispute over hours or vacation time. These digital systems also provide an accurate record of when employees start and end their days, helping you determine productivity levels.
  • Video surveillance: Video surveillance systems can strengthen your business’s security and productivity. Catching a thief on camera certainly reduces shrinkage costs.
  • GPS systems: If a team’s duties revolve around driving, businesses can install one of the best GPS fleet management systems to monitor driver safety, fuel efficiency and accountability.
  • Biometric technology: Biometric time and attendance systems use fingerprint, facial, palm or iris scans to record work time. However, biometric system laws govern how biometric information is recorded, stored and used.  

Regardless of the technology, some business owners may not know how far they can or should extend their authority to monitor employee activity. It’s always best to turn to federal and state employee monitoring laws and regulations to establish limits.

When you're choosing a GPS fleet management system, evaluate the features you need and ensure the system can accommodate them. For example, consider if you need mobile access, real-time notifications or robust help features.

What employee monitoring laws and regulations should you know?

Federal privacy laws, as well as most state privacy laws, give discretion to employers regarding how far they can go with employee monitoring programs. In some cases, depending on state and local laws, employers don’t have to inform employees they’re being monitored. However, some regulations do require employee consent.

“As a general rule, employees have little expectation of privacy while on company grounds or using company equipment, including company computers or vehicles,” said Matt C. Pinsker, a former adjunct professor of homeland security and criminal justice at Virginia Commonwealth University.

Here’s a deeper look at federal and state workplace privacy and employee monitoring laws. 


Federal workplace privacy and employee monitoring laws

Federal workplace privacy and employee monitoring regulations stem primarily from the Electronic Communications Privacy Act of 1986 (ECPA). Here’s what you should know about the ECPA: 

  • Business owners have the authority to monitor communications. The ECPA allows business owners to monitor all employee verbal and written communication as long as the company can present a legitimate business reason for doing so. 
  • Additional employee monitoring is possible with consent. The ECPA also allows for additional monitoring if employees give consent. However, the ECPA consent provision can be tricky, as it might be inferred to allow monitoring of employees’ personal and business communications.
  • Employers can legally look at sent employee emails. Additionally, several federal court cases have determined that employers may legally look through employees’ emails after they’re sent. That’s because the ECPA defines “electronic communications” as any electronic messages currently in transmission. Upon being sent, these transmissions become “electronic storage,” which courts have determined employers can monitor.
  • Monitoring must be within reason. In general, monitoring must be within reason. For example, video surveillance can be conducted in common areas and entrances, but surveillance in bathrooms or locker rooms is strictly prohibited and exposes a company to legal repercussions.
  • Business owners may need to store recordings. Another issue arises when you retain recordings, especially of meetings. If you record meetings with employees, especially ones dealing with disciplinary actions or HR-related issues, you may be legally obligated to keep those recordings and turn them over to a court if litigation arises. 

Monitoring computer web activity is separate and can fall under different legal precedents. Here’s what you should know: 

  • Employers can monitor web activity on company-owned computers. Computer monitoring software solutions have various features. Some can show you precisely what employees are doing on their computers. You can monitor activities such as which websites employees browse on the business’s Wi-Fi and what keystrokes they make on their company laptops. There is practically no reasonable expectation of privacy for an employee using a company device, so a good rule of thumb is to assume that anything employees do on their company-owned computer is visible to their employer.
  • Employers must carefully consider privacy laws. While it’s OK to monitor employees’ computer usage to ensure they’re not wasting time on social media and frivolous browsing, employers should know they risk acquiring too much information. Employers already have employees’ personal data, and they can run amok of privacy laws, like HIPAA, if they disclose private information to anyone.
  • Employers must protect sensitive employee information. Employers have the burden of protecting sensitive employee information, even if it comes from an employee’s personal browsing history or private data stored on a company computer. If a data breach occurs and exposes certain sensitive information, it leaves the company vulnerable to litigation by the employee.
Did You Know?Did you know
When you're choosing employee monitoring software, decide if you need webpage monitoring, application monitoring, email monitoring, webcam access, hardware blocking, or a specific combination of features.

State workplace privacy and employee monitoring laws

As with any issue that states regulate, workplace privacy and employee monitoring laws vary among states. The most notable laws come from the following states:

  • Connecticut: Any company that monitors its employees in the workplace must inform them in writing and detail the tracking methods used ahead of time.
  • California, Florida, Louisiana and South Carolina: All of these states’ constitutions explicitly state that residents have a right to privacy. As such, employers in these states may need to tread carefully when setting up employee monitoring systems.
  • New York: Any private company that monitors employees in the workplace in New York must provide specific notice upon hire and in a “conspicuous place” all employees can see. An acknowledgment of monitoring must also be kept on file for each employee.

In addition to employee monitoring laws, some states have strict data privacy laws. For example, the California Privacy Rights Act, which took effect on Jan. 1, 2023, substantially expands employee data protection requirements. To be safe, you may be best served by checking with your legal counsel to ensure your employee monitoring technology usage adheres to federal and state regulations.

Key TakeawayKey takeaway
If you run an online business, get familiar with online business laws that may affect your operations.

What are the ethics of employee monitoring?

In a VMware survey of 7,600 global business decision-makers, 70 percent said they installed or planned to install employee monitoring systems on remote employee devices. While most employers said they’ve implemented or plan to implement monitoring software to manage workflow and keep data secure, recording keystrokes and tracking locations come at a cost.

First and foremost, while it may be legal, regularly monitoring employee moves creates distrust. Even more concerning, a recent study from Harvard Business Review found that employees feel less responsible for their own conduct when they’re being monitored. They are also less likely to follow instructions and more likely to take unapproved breaks.

Monitoring can feel invasive and may make employees feel the company doesn’t foster a culture of ethical behavior. It can negatively impact employee turnover, productivity and employee happiness.  

How can you communicate about employee monitoring to employees?

The best way to combat the negative side effects of employee monitoring is by clearly communicating its purpose to your employees. Consider the following tips: 

  • Install visible signage about surveillance. Depending on the laws in your state, visible signage stating that security cameras monitor the premises may be enough to cover legal and ethical grounds. The knowledge that cameras monitor everything is often enough to prevent internal employee theft.
  • Be transparent about employee monitoring. Transparency is always a good practice. Because many employees feel uncomfortable being monitored, it’s important to be forthcoming about what you hope to accomplish and how surveillance aligns with your business’s goals. A study by Profusion showed that 61 percent of employees are comfortable with monitoring when it’s used to support fairness and transparency. 
  • Communicate openly about employee monitoring. Employers can strengthen trust by communicating with employees openly and honestly. All monitoring policies and procedures should be clearly communicated to new employees. Current employees should receive notice if any changes are made. In addition, employees should have access to the data employers collect about them and the ability to challenge interpretations of it. 
  • Track only what is necessary. As mentioned, GPS tracking is another form of employee monitoring, generally as part of fleet tracking and telematics on company vehicles. With most fleet software, managers can track a company vehicle and where it’s been, even if the employee is off the clock. Business owners can do this, as they have the right to know where their property is. However, GPS tracking of company devices like laptops and phones is another murky area because employers can learn more than they need to about employees’ activities when they’re off the clock.
  • Choose employee monitoring methods carefully. Clearly, as technology continues to develop, organizations will have opportunities to track and monitor employees in new ways. As these new options arise, business leaders must listen to employees and review legal guidelines for employee monitoring. “Ultimately, a balance can be reached by thinking through legitimate business interests and weighing them against the expectation of privacy of employees while also taking into account regulatory limitations, which may differ state to state, country to country,” said Joseph Lazzarotti, a principal with Jackson Lewis who leads the law firm’s Privacy, Data, and Cybersecurity practice group.
  • Review important considerations. There are pros and cons to implementing employee monitoring solutions. Before launching new programs, employers should carefully consider their monitoring goals and the potential impacts on employee engagement and company culture. Additionally, employers must ensure any new monitoring efforts comply with federal and local laws. 

Casey Conway and Andreas Rivera contributed to this article. Some source interviews were conducted for a previous version of this article.

author image
Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
Back to top
Desktop background imageMobile background image
In partnership with BDCBND presents the b. newsletter:

Building Better Businesses

Insights on business strategy and culture, right to your inbox.
Part of the network.