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I don't know nothing 'bout legal...
But I'd say that if the laptop was being used during company time, then ethically they have the same right to search it as the company machines, whatever right that might be--I'm assuming that you signed some sort of internet usage policy when you were hired, since almost everyone does nowadays. However, they obviously do not have the right to keep the laptop or destroy any of the data that might or might not be on it.
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