The Silicon Valley company obtained phone records of employees, board members and even journalists by deception. The spying scandal that ensued led to former Chairwoman Patricia Dunn's indictment and an investigation by the House Energy and Commerce Committee.

Although it is making a big splash in the headlines now, workplace spying is quite common — and usually legal. HP's spying brings attention to a growing trend in corporate America: electronically monitoring employee communications, whereabouts and Internet habits.

With increasing regularity, companies are relying on surveillance to monitor everyone in the firm. From cubicle to corner office to boardroom, the surveillance of employees has become almost commonplace. Already, 76 percent of companies monitor employees' Web site connections, and 65 percent block access to specific sites, up from 27 percent in 2001. About 35 percent track the content, keystrokes and time spent at the keyboard, according to a well-publicized 2005 study by the American Management Association and the ePolicy Institute. More than half of employers retain and review e-mail messages.

Employers in today's highly competitive and overly litigious work environment are monitoring employees with unprecedented zeal. Moreover, employee monitoring is going high-tech: tracking workers' whereabouts through Global Positioning System (GPS) satellites, implanting employees with microchips with their knowledge and hiring private investigators to check up on what employees are really doing at work.

How far is too far?

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It's a matter of trust, not to mention rights to privacy.

Some privacy advocates and employers are leery, saying that monitoring is pitting employers against their own employees. In fact, a breakdown of trust is a notable — if not the primary — argument against electronic monitoring.

Keith Ayers, president of leadership consulting firm Integro Leadership Institute, recently said employees who don't feel trusted, in turn, don't trust their companies. Why, he asked, would employees work hard for a company that does not respect them?

"Colleagues who trust one another have synergy and work better as a unit," Chuck Rauenhorst, CEO of Minneapolis-based Rauenhorst Recruiting, said in an e-mail to USA Today. "Eavesdropping, electronic or otherwise, is always going to tear that fabric of trust."

"The very fact they're increasing effort to monitor people is an indication there's a lack of trust in the first place," Ayers further noted. "They're saying, 'I don't trust you. I have to keep an eye on you.'"

As such, many believe the practice of prying is too corrosive to the employee-employer bond.

In fact, although most privacy advocates concede that employers have a legal right to monitor what employees do on company equipment, they quickly point out the possibility of it going too far and drifting into voyeurism. Lewis Maltby, president of the National Workrights Institute, advocates limited monitoring. However, he also told Minnesota Public Radio that "too many employers monitor every Web site workers visit, and technical staff read e-mail for kicks."

Marc Rotenberg, executive director and president of the Electronic Privacy Information Center, a public interest research center in Washington, said many companies have legitimate and legal reasons for such monitoring but gumshoe tactics also can erode trust as employers become suspicious of their own staff.

"We're more concerned that people are entitled to some privacy," Rotenberg said. "Where do you draw the line?"

On a higher level — above merely tracking the productivity of workers' Internet and phone use on the job — with HP, the problem is the techniques used. The computer giant hired private investigators who used a tactic called pretexting, or posing as someone else to gain access to that person's phone records. Investigators tailed reporters, dug through trash and sent a reporter a fake e-mail that contained tracking software. Most of these tactics are slimy...but legal. Pretexting, however, is not legal.

A number of cautionary lessons are emerging on business ethics, management and security, say experts. While some of the tactics HP used may be illegal, The Christian Science Monitor said, others have landed the company in trouble simply because they were improper.

"The bar of ethics is higher than the bar of the law," according to Dean Krehmeyer, who heads the Business Roundtable Institute for Corporate Ethics in Charlottesville, Va.

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It's not only a good idea, it is necessary.

In today's business world, many believe employee surveillance is necessary. Foremost, there is the matter of productivity.

Some employers say they're not damaging trust. Instead, they argue, spying on employees is necessary today in large part because technology has raised the risk that workers will goof off. New technologies and opportunities in business have opened the door for abuse, leaving businesses scrambling for ways to manage their employees' activities in the workplace. Companies are snooping on employees, but it's usually on routine matters of time wasting, like how much time they spend surfing the Web.

While the spying aspect of work-monitoring devices gets the attention, some employers find such monitoring also helps distribute work more evenly among employees and dispatch them more efficiently, according to Dan Gillison, national director of state and local public safety at Sprint Nextel, in a recent Chicago Sun-Times article:

Hardworking employees should welcome monitoring, he said, because it can qualify who is "busting their butt and not being recognized." Technology can also create what Gillison called "bread crumbs" — proof that a job was attempted, or a worker was at his assignment. "It's management by fact," Gillison said.

Companies also monitor to prevent the introduction of viruses and to block employees from watching expensive, bandwidth-hogging Internet video.

Some even say that if you have nothing to hide, then you have no need to be concerned.

And voyeurism? Under federal law, when employers monitoring phone calls realize the call is personal, they must stop listening.

By and large, as mentioned in the first argument, looking is legal.

"The computer system is the property of the employer and as such the employer has the right to monitor Internet activity and e-mail," according to Nancy Flynn, executive director of the ePolicy Institute in Columbus, Ohio. "Employees should have no reasonable expectation to privacy."

On the larger scale, press leaks and theft of trade secrets are big concerns. Corporate e-mail investigation has become an increasingly important function for organizations needing to protect their most critical data and to prevent unauthorized use of the corporate e-mail system, noted GWAVA, a provider of e-mail surveillance, anti-spam and anti-virus software solutions. In a knowledge-based economy, generating and guarding ideas is now central to any corporation's market value.

But the main reason is fear of lawsuits; for instance, avoiding liability associated with workers who look at Internet pornography. Almost 25 percent of companies have had employee e-mail subpoenaed because of a workplace lawsuit, usually involving harassment or discrimination, according to Forbes.

"Fear is driving both ends of the e-mail surveillance issue," said Richard Bliss of GWAVA. "Employees are worried about management looking over their shoulder and watching their every move within their e-mail account, and CEOs are concerned with the ability of a disgruntled employee to leak vital or sensitive data outside the company."

Indeed, employees across the nation have been fired for disclosing confidential information, criticizing their company or offending their supervisors in e-mail, online journals or blogs. Some employers disclose the extent of such computer policing; others do not. Only employers in Connecticut and Delaware are required to notify employees they are being monitored.

Earlier: Pssst. Your Boss Probably Knows You're Reading This.

Resources

Employers look closely at what workers do on job
by Stephanie Armour
USA Today, Nov. 8, 2006

Hewlett Packard's snooping reveals workplace truth: there are no secrets
by Jon Gordon
Minnesota Public Radio, Oct. 2, 2006

The changing rules of corporate spy games
by Mark Trumbull
The Christian Science Monitor, Sept. 25, 2006

Here's Looking At You
by Andrew Herrmann, Howard Wolinsky
The Chicago Sun-Times, Nov. 12, 2006

Software helps investigate employee email accounts.
Press release
GWAVA, Sept. 19, 2006

How To (Legally) Spy On Employees
by Hannah Clark
Forbes, Oct. 25, 2006