Employees or prospective employees agree to give up said passwords only if hiring manager/company gives them their social media account passwords. I.E - If I have nothing to hide, you have nothing to hide. You know employer an employee can never be to sure who they are working for ...
An entire side industry might spring up entirely geared toward managing and tracking who sees what on your social networks or, social networks might respond by letting you set up two logins - one for safe log in that only you know and one for compromised login that you give to an employer when they compromise you.
I hope that long before the states need to pass more laws like this that employees or prospective employees would publicly avoid business/government agencies asking for social media logins. "I really wanted that great job at Great Company, but it has asked me for my social media logins and stated that it would hold the things I did as a teenager against me."
The public perception that it is wrong to ask an employee/prospective employee is very strong and the more negative marketing associated to an employer gets around that will not only keep other employees away but it will chip away the confidence existing employees have that they work for a good employer.