U R Hereby Fired!

Thought those instant-message flirtations you sent at work were private? Think again. Initially the domain of teenagers unsatisfied with gossiping on the phone, IM use is burgeoning at the office. By some estimates, within three years IM will surpass e-mail as a business tool.

Companies have begun setting their own "parental controls" by monitoring and archiving employees' IM chats. They've been driven partly by regulation. The SEC requires the 8,000 U.S. securities dealers to keep electronic records of IMs for three years. Hospitals and insurance companies are struggling to comply with a law mandating preservation of all electronic communications related to a patient's health.

The need to track cyberchatter has been a boon to companies providing monitoring services. IMlogic, based in Waltham, Mass., opened its doors just two years ago and has sold software that monitors the chats of more than 250,000 workers. The software allows an employer not only to keep a record of every keystroke its workers make and receive, but searches for potentially problematic key words like "windfall" or "under the table." This could help companies root out bad seeds, and prove as helpful to investigators as e-mail has been in detecting alleged white-collar crimes by the likes of Martha Stewart.

Those monitoring tools also help keep IM chats more pro-fessional. IMlogic CEO Francis DeSouza says many clients were surprised to find employees conducting business under screen names like biceps2big. The ability to keep employees' chats from steaming up computer monitors was a key selling point to Steve Leeke, a partner in the Dallas private equity firm 2M. "Logging on as cute-lilpixiechick is fine when you're chatting at home, but not when you're representing us."