I used to run retail stores. Monitoring employees is a MUST sometime covertly. A significant percentage of loss in a retail environment is internal theft. http://www.crimedoctor.com/employee_theft.htm This article has it at 47%. I have heard stats ranging up to 80%. I would imagine it would depend on the type of retail business.
One example with which I have had personal experience. I ran a video store. The store management was completely turned over. The reason for the turn over, along with poor sales, was the store was losing 100 movies and games a month when they did a New Release inventory (once a month) and 600 Movies when they did a full inventory (once a quarter). When you lose that volume, it is internal. We began watching security tapes and the store from across the street with binoculars. It took only two days to find one of the people stealing. She was arrested during a store meeting. The next quarterly inventory, losses dropped to 6 movies. Now, this person did not account for the entire loss. A lot of the loss was eliminated when the other employees saw we were watching and that they would be arrested.
Had the previous management been doing this from the beginning, there would have been thousands of dollars worth of savings. Also, the Remember that a New Release not available for sale usually costs between $100 and $250.
I do not know from this post if this guy is going overboard or not. I do not know what type of retail business he is in. If I were running the store, I would let my employees know that they are being watched, always. But I would not disclose all the ways they are being watched.
Retail is not the only business that does this. Casinos and banks are equally aggressive in regards to monitoring employees.
This may be legit, it may not. I do not know. I would submit that in a business environment on computers that are owned by the business, it is the right of the business to monitor the computers covertly or not. I personally would want some double check on the employee charged with the covert surveillance to ensure they are not monitoring systems they no business watching (payroll comes to mind). But on the face of it, to have covert access to a security camera system so an employee does not know when they are being watched is not something I would object to in a retail environment.