Earlier quoted context omitted.
The same thing that would be bad about using your phone GPS location sensors to automatically send you speeding tickets every time you wander >1mph over the limit. Even without intending to, everyone would go from a ticket or two per decade to dozens of tickets on every commute. "But the law is still the same!?!" Of course it is, but changing from poorly scalable human-required surveillance to always-on, fully-scaled…
It's still up to the manager to choose what to do about it. A reasonable manager would accept the occasional smoke break, but do something about hour long naps.
Often a manager will not have any say over these things. "The metrics speak for themselves!"
Regardless, I don't think we should design systems with the assumption that the people in charge of them will be compassionate and reasonable. There are a lot of petty, corrupt (in the moral sense, not financial) people out there in positions of power over others.