You should not expect any privacy if you are online from work. I mean NONE! Your employer is responsible for everything that you do on their time.

• They own the computer and the systems. 

• They are the one who pays for the internet service. They are responsible if you harass or annoy, or commit any cyber crime. 

• They may be attempting to stop you from using their fast connections to download mp3's, hack your ex, or any number of other possible cyber crimes. 

• They may be trying to stop you from seeking out porn, or find a new job.

What are some ways they may be watching you ->

• They may just be walking around, and seeing what you have open

• They maybe using employee monitoring software like Cyberscout, iWarden, Cyber predator, Superscout. 

• They may have key loggers or screen capture programs which let them know 

  • how many emails you got today, 

  • that you called your boss a pig, 

  • or that you ended up on a porn site. (intentional or not) 

None of this may be stored on the workstation you use. It may not even be stored on a computer where you work. It may be immediately sent to a third party in another state who prepares a report for your employer.  (It's cheaper than you think) 

AN important NOTICE to messenger 5.0 users> messenger versions prior to 5.0.0.1050 have major security flaws, the largest problem being the forced download of images and other files. Many have been found to be infected. If you are chatting from work and  and infect the system, better start packing your desk up......
So, again, when in doubt, drag out your employee handbook, ask your human resources department, or your boss. find out the policy . And if there is none, this is your opportunity to help create one.

So, how is your boss watching you ~ 
  Well your best bet is to check your employee handbook, or ask. Remember if they have a written policy in the handbook, you are responsible for adhering to it....

Pleading ignorance of the policy if caught, will not work. many companies are instituting a test of computer skills to employees that includes internet use, and often is used later to show the employee has/had the skills or understanding. 

If they say internet is okay after 4, then do not try it at 3:45. If they say email and surf is fine, then only do those activities. But if they say no chat .... then don't chat!  And find out if they consider instant messenger the same as chat. Some do, some don't. 
While some employers say they don't monitor, or care: larger companies, tech companies, or companies that have sensitive info are going to be most concerned.  And more companies are caring about how their employees surf.
Do not assume your company is one of those that don't care.
If there is not policy in place, get on that committee!!! =O)

check the newsletter for some details on helping develop a company internet policy ~