Could you lose your job over a social networking site?

I recently talked to a few of my co-workers and they informed me that your bosses have the "right" to let go any employee who misuses a social networking site. I would like to know if this is true. I have a Facebook account, which i never use at work, i use it to relax, catch up with friends from college, and yes i do use foul language just like everybody else (but remember, its at my house, my own eprsonal laptop, not during work) but i keep hearing that people are getting fired over profile pictures, and even that their accounts are being hacked by the companies in order to have "evidence" of "improper behavior". Once again, is this a violation of privacy? Could you lose your job over a social networking site?