A Northern Virginia car dealer pleaded guilty in Arlington County Circuit Court yesterday to illegally recording an employe's telephone conversation and was given a suspended prison sentence.

In exchange for the guilty plea, county prosecutors agreed to drop charges against the dealer, Daniel Stephen Howell, 30, in connection with alleged tape recording of three other conversations and possession of wiretapping equipment.

According to Commonwealth's Attorney Henry Hudson, Howell said he tapped the conversations to "monitor his employes' activities."

"I think that the average businessman believes that in the interest of business he can monitor the actions of his employes," Hudson said yesterday.

"I think there's some real question that he didn't know what he was doing was illegal much less that it was a felony," Hudson said.

Howell, president of Brown Arlington Honda at 3910 Lee Hwy., said when he was indicted in January that he did nothing wrong, and described his actions as "standard business practice."

Howell could not be reached for comment yesterday. His attorney, Claude M. Hilton, declined to discuss the case.

Howell pleaded guilty yesterday to one count of unlawful interception of wire communications. Circuit Judge William Winston sentenced Howell to serve two years in jail but suspended imposition of the sentence for two years. At that time, if the court finds Howell has committed no further offenses, he will not have to serve the jail time, prosecutor Hudson said.

Howell was charged in connection with the alleged taping of employes' telephone conversations at his dealership as early as 1981. The charge he pleaded guilty to yesterday involved a conversation between employe Ronald Stewart and a customer.

Last year, police seized 10 cassette tapes, a telephone amplifier and speaker, a Sony recording system and some electronic listening devices from the dealership, after informants told them that the telephone conversations of employes may have been taped illegally for more than a year.

Hudson said yesterday that it is a violation of both Virginia state law and federal law for a private citizen to intercept the telephone conversations of two other parties. Hudson said wiretapping is lawful only if a court order has been issued. A person can legally record his end of a conversation, Hudson said.