Is it illegal for employers to use employee monitoring software? As these tools become more popular in the workplace, the question is as relevant as ever.

Employee monitoring software offers major productivity benefits when implemented with care. However, many fail to use it responsibly, crossing lines and breaking trust in the process. The consequences go beyond lowered morale. Unethical monitoring can lead to legal challenges and ultimately ruin your reputation.

While this is mainly due to a lack of understanding of what is legal and what is ethical, there’s more to the issue. In this blog, we’ll cover everything you need to know about employee monitoring, including how to set it up!

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Is Employee Monitoring Legal?

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The short answer is yes. Under the Electronic Communications Privacy Act of 1986 (ECPA), using a computer monitoring app is entirely legal in the United States. 

‍However, some states might impose additional guidelines. Let’s look at the  key regulations in the U.S., EU, and other regions:
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• United States: At the federal level, employers are generally permitted to monitor employees without prior consent. However, certain states, including Connecticut, Delaware, Texas, and New York, require employers to inform employees about monitoring practices.

• European Union: Under the General Data Protection Regulation (GDPR), employers must either get explicit consent from employees or have a legitimate business reason to monitor. 

• Other Regions: Laws vary worldwide. In Canada, for example, employers need to inform employees about monitoring and obtain their consent. In other countries, monitoring without consent may be allowed under certain conditions.

Wherever you are, remember that respecting employee privacy is about more than following the law—it’s about building trust. Without it, you risk losing valuable employees and even facing legal repercussions.
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What Happens When Monitoring Goes Too Far?

Unethical monitoring can disrupt your team’s productivity and undermine trust at work. When employees feel constantly watched, they lose confidence in themselves and their employer. 

In a 2023 ExpressVPN survey, 59% of employees reported feeling anxious about their employer monitoring their online activities. Even worse, 41% worry they’re always being watched, and 32% say they take fewer breaks because of it. The concern isn’t one-sided either—83% of employers admit they see ethical issues with online employee monitoring.

This kind of stress impacts both employee engagement and productivity. People become reluctant to take initiative, worrying more about being scrutinized rather than doing their best work. Over time, unethical monitoring can harm your company’s reputation and make retaining and attracting talent harder. 

It’s all in the approach. You shouldn’t just be asking, ‘’Is it legal to use an employee tracking system?’’ and jump head first if the answer’s yes. You should also be looking for the right way to do it.
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Best Practices for Ethical Employee Monitoring

Remote monitoring apps seem to rub people the wrong way. There’s a lot of anxiety among employees about being scrutinized and micromanaged. That’s why using employee monitoring in the workplace requires a blend of compliance and compassion. You need to learn how to balance the legalities with privacy concerns. 

Here are the steps for setting up fair, compliant policies that build trust:
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Be Transparent About Your Policies

Transparency is key to building trust. Start by holding a company-wide meeting to introduce your monitoring policies. Outline what’s being monitored—whether it’s online activity, app usage, or time spent on tasks—and explain why this information is valuable for the business. 

Follow up by providing a clear, written policy that employees can reference at any time. Avoid technical jargon; instead, keep language simple and direct. You can also create an FAQ document addressing common concerns, so everyone knows exactly how data will be used and protected.
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Secure Consent Whenever Possible

Even if local laws don’t require consent, asking for it can make employees feel respected. Send out a consent form that explains the monitoring policy and allows employees to ask questions. Make this a two-way conversation; be open to any feedback or concerns they may have. 

Additionally, offer a follow-up session where employees can discuss any lingering worries. This extra step shows you value their input and helps ensure they feel comfortable with the process.
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Limit Monitoring to Business-Related Activities

Define your goals. What are you looking for? Do you want to track project timelines, app usage, or task completion? Pinpoint the data you need to meet these goals. Avoid collecting excessive information that could intrude on personal privacy.

For example, instead of tracking every keystroke or minute-by-minute browsing, limit monitoring to work-specific apps and activities. This approach respects employee privacy while still providing valuable insights into work patterns.

Make sure your chosen monitoring tools can meet these specific goals. Rely on more advanced monitoring solutions with lots of customization options. 

With Insightful, you can adjust the settings to follow any metric you prefer—like app usage or time spent on key projects. As a result, you can focus only on relevant activities, rather than broad or intrusive tracking.
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Offer Employees Access to Their Activity Reports 

Giving employees access to their own activity data helps build trust and encourages them to take charge of their productivity. Start by setting up a system that allows employees to log in and review their reports anytime. This could include data on time spent on tasks, app usage, or daily productivity trends.

Encourage regular check-ins, so employees get familiar with their own productivity patterns. You might suggest they review their reports weekly to spot any habits or trends they’d like to improve. It’s also helpful to offer guidance on how to interpret the data—what each metric means and how they can use this information to make adjustments.
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Conduct Regular Reviews & Updates

As your team grows or privacy laws change, it’s important to keep your monitoring practices up-to-date. Start by scheduling regular reviews, perhaps quarterly, to evaluate your current practices and identify areas for improvement. During these reviews, double-check whether all monitoring activities align with company goals. Also, make sure they don’t overreach into employees’ private information.

Insightful’s Audit and Compliance Reporting feature helps keep your monitoring practices in line with regulations. With clear audit trails and easy-to-read compliance reports, you can track and document monitoring activities, making it simple to adjust policies as needed.

Additionally, Insightful’s Privacy Settings let you control what data is collected, focusing only on business-related activities. These settings help protect personal information and ensure your monitoring remains respectful and legally compliant as your team and regulations evolve.
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FAQ: Common Questions About Employee Monitoring

Are monitoring policies mandatory in the workplace?

While monitoring policies aren’t always legally required, they’re highly recommended. 

A clear monitoring policy helps avoid misunderstandings and ensures that employees know what to expect. Having a documented policy helps you communicate exactly what’s being monitored and why, which fosters trust and transparency in the workplace. 

Some states and countries do require written policies, so it’s best to check the local regulations.

Are employers required to obtain consent for employee monitoring?

It depends on the location. In the U.S., consent isn’t always required for monitoring, but certain states mandate notification. In the EU, consent is more often required under GDPR rules, or at least a clear, documented reason for monitoring. Even in regions where consent isn’t legally required, asking for it is a respectful approach that can help build trust with employees.

Is monitoring keystrokes on company computers legal?

Yes, monitoring keystrokes on company-owned computers is legal in many places, especially if it’s done for a legitimate business purpose and within the boundaries of local laws. 

However, it’s crucial to be transparent about this practice in your company’s monitoring policy to avoid creating a sense of mistrust. Keystroke logging can feel invasive, so it’s essential to ensure that this level of monitoring is truly necessary.

Are employers allowed to monitor screen contents on company computers?

In most jurisdictions, employers can monitor screen activity on company-owned computers, provided it’s transparent and relevant to job performance. This type of monitoring can be helpful for tracking productivity or ensuring compliance with company policies. 

However, to avoid privacy concerns, monitoring should be limited to work-related activities, and employees should be informed if screen monitoring is in place.

Is it mandatory to inform employees about monitoring?

In some areas, yes. Certain states in the U.S. require companies to inform employees about monitoring, and in other places—like the EU—disclosure is a must under GDPR. Even where it’s not legally required, informing employees about monitoring practices is a best practice that builds a culture of openness and respect.

Can employers monitor employees during breaks?

Generally, monitoring employees during breaks is discouraged and, in some places, even prohibited. Most privacy laws protect employees’ right to personal time, so tracking activity during designated break periods can lead to privacy issues. 

Companies should establish clear boundaries in their monitoring policies and pause any tracking during breaks, ensuring employees have uninterrupted personal time. If break-time monitoring is essential for a specific reason, be transparent about it and obtain consent where required.

Are employers required to inform employees about what is being monitored?

In many locations, yes. Informing employees about what is being monitored is legally required in places like the EU under GDPR, and some U.S. states have similar rules. 

Even in areas where it’s not mandatory, it’s a best practice to disclose what specific activities are being tracked—such as internet use, application usage, or screen content. The clarity helps employees feel informed and reduces potential trust issues, making it clear that monitoring is only focused on work-related tasks.
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Conclusion

When employees feel respected and understand the purpose behind monitoring, they’re more likely to embrace it. Look for a monitoring solution that prioritizes compliance, transparency, and respect for employee privacy. 

Learn more about how Insightful can support your team with advanced, compliant monitoring. Book a demo and start a 7-day trial (no credit card required).

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