What are the company鈥檚 legal obligations in the given scenario?

The Spendbig brothers, who serve as CEO and COO of the company, want to monitor employee computer and telephone usage. They need a quick answer on the legality of reading employee e-mail as well as monitoring the Web addresses visited by employees during the workday. They also want to monitor employee telephone calls, both for quality of services as well as to determine if personal telephone calls are being made during working hours. There is no current policy language anywhere at Spendbig relating to monitoring employees in these areas.

A company has the right to see all of the information that is transmitted or received on their systems. If you are using your own personal equipment (cellphone, laptop that is yours and not using their server or the pay telephone in the lobby) they do not have that right. The stink with HP was the company was tapping personal communication devices to catch the person who was leaking information. They don't need a policy as it is already a statutory law. Sorry, you just need to go and do your work and write e-mails to friends on your own time.

Just more of "BIG BROTHER" interference in our every day lives..
I would not work for a firm that had such a policy

They come up with an "employment agreement" that discloses all the things they may do, then they get the employees to sign it in order to keep working there, then they start monitoring. Simple as that.

Two key issues

Can you monitor and record (emails or phone calls) and who all do you have to tell

Yes, you can it is legal so long as ...
You have informed the employees you will be doing it and you inform people on the other end of the Mail and Phone messages that you will be doing it (In a two party state you need both, in a one party consent state you only need one of the two , your employee or the customer)

See the HP case out of California for what happens if you try to get around these rules and just spy on your employees