Social Media and the Boss

I have read many articles dealing with the use of social media and employees. Some employees have been reprimanded and in some cases even fired for things they have said online about their workplace, pictures they have posted of them doing illegal activities, etc. The other day, I read an article about a boss who found himself in a sticky situation after posting pictures on his Facebook page of him attending the annual "weeklong anything-goes festival" Burning Man. The CEO of Joie de Vivre, a company that operates a collection of boutique hotels in California, posted pictures of himself (including one of him in a tutu) having a good time while off work. The reaction from his employees was less than favorable. In the end, he decided to keep the pictures online, despite the recommendations of some of his executive staff. It makes me wonder about rules for social media usage for both employees and the boss. Should your employer (or employees) dictate what you can and can't do online? And how should the rules be determined? Illegal activities are one thing. What about activities that may not be socially acceptable? All I know is that it will be interesting to see what happens in the future.