From our University of Minnesota student reporter, Jessica Van Berkel:

It was all caught on tape — in May 2009, a municipal liquor store clerk tore a memo off the wall, vented about her boss and told a co-worker to put four cents into the penny tray to balance the till.

But the city of Paynesville went too far when it imposed an eight-hour suspension without pay for Renee Topp, the senior clerk at the municipal liquor store, a state arbitrator ruled last month.

The punishment was decided after the Paynesville city manager, mayor, city council members and the city's attorney watched surveillance recordings of Topp's actions. The city ruled that Topp violated policies requiring employees to be "courteous at all times" and to exhibit "conduct that is ethical, responsive, and of high standards becoming of a city employee..." The city described the use of a penny dish as a "slush fund."

The video recorders were installed to watch for illegal behavior like robbery and underage purchases, and using them to monitor unsuspecting employees was "illegal" and "just plain unfair," according to the AFSCME Council 65, which brought the case before the Bureau of Mediation Services in December. The union also argued the punishment was too severe.

But administrators in Paynesville, a city of about 2,200 people located northwest of the Twin Cities, said the restriction of recordings does not apply to municipal government, and Topp "should not have expected that conversations would be private in a public environment," according to the bureau's report. The city said that even if the recordings were improperly obtained, the punishment should remain because Topp admitted to the conduct.

In February, BMS Arbitrator Eugene Jensen issued his ruling that the surveillance was unfair, and the suspension should be replaced with a written reprimand. Topp said she will be receiving the pay from the suspension in her next paycheck.

How far should employers be allowed to go to keep an eye on employees? Do employees have any right to privacy in the workplace?