More employers are using services such as those provided by Nextel Communications that are designed to track their employees who carry GPS-enabled cell phones. Some of these services boast features such as "geofences" that set off an alarm at the office if and when an employee goes to a preprogrammed off-limits site, such as a bar.

Some of the questions that immediately come to mind are:

• Does this kind of service violate an employee's privacy rights?

• When is it appropriate to track your worker's whereabouts?

As GPS technology proliferates, there’s growing awareness among cell phone owners that the devices can track them. Nearly half of all wireless phone users and 55 percent of all wireless Internet users knew of some location-based services, according to a survey by In-Stat/MDR. More importantly to U.S. cell phone carriers, more than a third of those surveyed said they’d be willing to pay a monthly fee for location services.

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One of the earliest examples of how an employer can walk this fine line is in Chicago, where about 500 city employees now carry geo-tracking phones, mainly as a tool to increase their productivity. The phones were distributed to employees only after their unions won several concessions, including allowing workers to shut down geo-tracking features during lunch time and after hours.

Another showdown over the technology erupted last year in Massachussetts, when the state highway department proposed issuing GPS-phones to snowplow drivers to achieve greater accountability from 2,200 independent contractors used to clear the roads. Hundreds of drivers threatened to sit out the first major snowfall of the year in protest, but eventually agreed to use the phones on a trial basis.

A San Diego-based consumer advocacy group, the Privacy Rights Clearinghouse, advises employers to only consider using the phones to achieve a legitimate business purpose, and not check up on potential loafers.”There are good business reasons for using it,” a representative for the group said. “But it must be coupled with a very robust privacy policy.”