To answer your question, it looks like it's legal as long as the employees are aware of it and give their consent, acording to this article: Employee Monitoring Facts Every CIO Should Know
More importantly, I understand your concern over your employees' web surfing since you are part-owner and this direclty affects your personal wealth, but couldn't this also indicate an underlying problem? Do the employees have any equity in the business and opportunities for advancement? Or, is their work primarily fear-based (e.g. they feel they have to work in order to feed their families and they aren't connected to any larger sort of mission). Does your organization follow the 12 Elements of Great Managing
? I'm normally skeptical of lots of business books, but the 12 Elements seem very data-driven and accurate.