Almost three-quarters of major U.S. companies snoop on their employees' phone calls, e-mail, Web surfing habits and computer files, according to a new survey on workplace privacy. 

In all, nearly 73.5 percent of companies surveyed admitted they "record and review their employees' communications and activities on the job." 

The growth of electronic monitoring has been explosive during the past two years, according to the survey. 

Fifty-four percent of employers report monitoring their employees' Internet connections. Thirty-eight percent review e-mail messages, up from 15 percent in 1997, and 31 percent review computer files, up from 14 percent in 1997. 

In an effort to control employee misuse or personal use of telecommunications equipment, 55 percent of respondent firms use "blocking" software to prevent telephone connections to unauthorized or inappropriate phone numbers. Twenty-nine percent block Internet connections to unauthorized or inappropriate Web sites. 

The companies said in the survey that they monitored Internet activity because they want to avoid sexual harassment and other kinds of lawsuits that could stem from offensive material on display. 

"Productivity suffers when employees surf the Web on company time. Additionally, employers can face liability issues when employees access pornographic or inappropriate Web sites that may offend their colleagues," they say. 

The larger the company, the more likely it is to engage in monitoring and surveillance activities, the survey says. 

Respondents from the financial services sector, including banks, brokerages, insurance firms and real estate companies, lead the pack when it comes to monitoring their employees' e-mail, with 55 percent engaged in the practice. Almost three-quarters, or 73 percent, of financial service businesses monitor employees' Internet connections. 

Some companies are beginning to take action against employees they find Web surfing pornographic sites or sending off-color e-mail. 

Examples include the Compaq Computer Corp., which fired 20 employees who had logged more than 10,000 hits apiece on pornographic Web sites. The New York Times Co. recently fired 22 people in Norfolk, Va., and one in New York for sending offensive e-mail. 

The Federal Electronic Communications Privacy Act of 1986 forbids most interception of electronic communications, including e-mail. But companies can monitor e-mail to protect their rights or property, or for a legitimate business purpose. 

Mobile phone network operator Orange has sacked forty members of staff for the "distribution of inappropriate material" in what is believed to be the biggest Internet sacking case in the UK. 

Orange refuses to comment on whether the material is pornographic in nature but claims that all employees are made aware of its strict terms and conditions in their contracts. Experts warn that the increasing trend of sacking employees for distributing pornography or spending too much time online could be being used as an excuse to get rid of people. 

An Orange spokesman confirms it has got rid of forty employees. "Members of staff have been dismissed for the distribution of inappropriate material," he says. "Our terms and conditions clearly state that the distribution of messages or attachments that are offensive, harassing, obscene, racist, sexist, threatening or libellous is strictly prohibited." 

The Orange employees are the latest victims in a growing number of Internet sacking cases. This month, White House staff were caught downloading porn and one stepped down. Last June a Cheshire woman was fired for spending too much time surfing and a Gloucester City Council worker was dismissed in September for "misusing" the Internet. Perhaps the most publicised sacking for surfing case came in February of this year when 23 employees of the New York Times were sacked for swapping porn at work.

For the second time, Dow Chemical Co. has fired a group of employees and reprimanded others after the employees allegedly violated the company's policies against pornographic e-mails. 

In the Midland, Mich.-based company, 24 employees at a manufacturing plant in Freeport, Texas, have been fired and another 230 have been disciplined in the latest incident. Dow last month warned it would dismiss up to 40 people at the Texas facility in the wake of employee complaints about inappropriate e-mail usage.

The punishments that resulted from the company's investigation at the plant were set depending on what individual employees sent to others via the corporate e-mail system. He say that the content included in messages "was sexually explicit as well as some violent images." 

The company does periodic monitoring when server hard disks become full, to determine why that has happened. If inappropriate material is found, an investigation could ensue. 

In a separate incident in July, 50 employees at Dow's headquarters site in Michigan were fired and another 200 were disciplined for distributing, downloading or saving pictures that were either pornographic or violent in nature.

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