Privacy Rights of Employees Question

Hi everyone. I work for a company in NJ and due to increased Internet usage as well as suspected “lazy” employees using their computer for everything but work, I have installed monitoring software on all client computers. It can’t be detected by theusers – even through Windows Explorer. They have no clue their activity is being monitored. I know by law, I have to announce to everyone they are being monitored – correct? Also, anyone have any suggests as far as writing a Privacy paper for each employee to sign? I need to protect the company from Invasion of Privacy lawsuits, once this is announced.

Thanks.