Oh, come on Pie. Don't give up that quickly!
The default should be no surveillance cameras unless there is a reason. Duck's reason for a camera just quit. So a camera isn't needed.
Does she have a right to put a camera in her private business? Yes. Of course. But it will be bad for morale. A good boss takes things like morale into consideration when making decisions. Her remaining employees are honest. Why should she videotape them? Would you, classicman, like it if your boss pointed a video camera at your desk to videotape you while you work? I can't answer that for you, but I can say that I would hate it if my boss did that to me. I'd probably start looking for another job.
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