The California Supreme Court recently ruled that an employer did not invade the privacy of two female employees when it set up a hidden camera in their office.
The employer believed that someone was using the employee computers at night to access pornographic websites and the camera was used at night to try to figure out who was behind the wrong doing. The employer was careful not to tape the employees during the day. The court ruled the employees had "a legitimate expectation of privacy but it was not violated by the employer in such circumstances."
California is typically pro-employee and pro-privacy, but employers there and elsewhere probably can safely videotape employees under such circumstances if they have legitimate reasons to do so.
Employers, of course, should take steps to minimize the impact on employee privacy or publish a monitoring policy so employees have reduced expectations of privacy.
Source: HR Legal Update, August 25, 2009