I read the stories about employers asking for applicants passwords to their Facebook accounts, so I'm sure it happens, but I don't know anyone who has ever experienced it. I don't think this is a runaway problem and don't think the government needs to regulate it. This kind of reactionary legislation will have unforeseen consequences.
To jwhite I say, "what happens on your social networking site isn't your private life, you are intentionally making it public." If you don't want your employer to see it, don't post it. And to leichim I say, "Awesome. I completely agree." If an employer has the audacity to ask for that kind of information I'd give him a few choice words and walk away.Who knows, maybe its a test to see how easily you would give away company secrets...