On March 26, 2012, Representative Mary Franson proposed legislation that would make it illegal for employers in Minnesota to require applicants or employees to provide passwords or other account information related to their social networking websites.  The text of the proposed legislation is as follows:

No person, whether acting directly or through an agent, shall require, as a condition for consideration of employment, that any employee or prospective employee provide any password or other related account information in order to gain access to the employee’s or prospective employee’s account or profile on a social networking Web site.

See H.F. 2963.
The practice of employers asking employees or applicants for the passwords to their social networking sites, like Facebook or LinkedIn, has been criticized heavily in the press recently.  Even if the proposed legislation regarding this topic does not become law, there are some circumstances under which the practice could arguably raise invasion of privacy or Stored Communications Act concerns.
Takeaways:  Even if the proposed legislation prohibiting employers from requiring employees or applicants to provide access to their social networking sites does not become law, there are potential legal risks with this practice.  As a practical matter, the practice may also lead to negative media attention for employers.  Employers should consult with counsel if they have further questions about this topic.