Employer retaliation

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My (part time) employer had me as a contractor rather than an employee and a tax man told me this was improper and so i fixed it with my boss although he dragged his feet.

That was a week ago.

He recently emailed me asking me to work 4 days in a week so another employee (the one other computer guy) could go to a wedding.

I declined because I'm looking for full time work and I can't commit as I don't know what might come up vis a vis jobs, and I need to keep my schedule open for work and adding a bunch of caveats at a job interview will cause me problems.

Now he's asking only me to have a spyware screenlogging program installed. I currently log my work on spreadsheets and have done so for a year without complaints.

It seems like he's retaliating. I'm talking to him in 20 minutes. Do I have options? I'm going to try to be conciliatory and explain why I can't take the days and tell him how i feel about the screen logging.

What should I do? What are my options?