I don't believe in rhetoric and cute little sayings, but occasionally, one will be a gleaming nugget of truth... and here's one: "Don't poop where you eat".

Firstly, he shouldn't be "touchy-feely" with you. That is illegal... not to mention unethical.

Secondly, assuming you two are not the only two people who work wherever it is you guys work, when it gets out (not if...) it will be absolutely destructive to the climate at work and would be highly inconsiderate to the other employees and supervisors/managers in the workplace. Other employees will feel that you are treated differently because you're sleeping with the boss (which would be true). Other managers/supervisors would be put in a position where they either turn their head to unethical behavior or turn the guy into the senior managers.

All of this sucks. Have the dirty dreams and leave it at that. I would also recommend you ask him not to be so forward with you unless he wants to date you and, if he does and you think it's a good idea (and worth it), you ought to look for another job.

its a disaster waiting to happen