In a system for measuring a physiological parameter using at least one wavelength of electromagnetic energy transmitted through living tissue, a method for determining an operational status of the system. The method includes receiving a data signal from at least one sensor, determining whether the received data signal is representative of the physiological parameter by sensing whether the at least one sensor is secured to the living tissue, and generating a status signal representative of the operational status of the system based on that determination. The determination includes measuring an output level corresponding to the at least one wavelength. The determination may also include analyzing a spectrum corresponding to the at least one wavelength to determine a percentage of energy contained in a subset of the spectrum, or monitoring an amplitude of the data signal for a given interval.