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not sure what the regulations are over in the USA...but is there a human resource manager / officer you can approach to discuss this unwanted behaviour?
in australia what you are experiencing are classed as discrimination and sexual harrassments... employers can be penalised ($$) if attitudes and behaviours from employees are not addressed...if they are making you feel uncomfortable then its not a very suitable working environment and your BOSS needs his A'rse kicked
dont you touch him or her, but go to someone in the organisation who is higher up in the organisation chart.
...sometime senior management are more proactive then supervisors 
if it's a small company, which it sounds like, there's little you can do... honestly unless he's actually discriminating against particular ethnic groups (hiring practices, promotion wise etc), it's kinda hard to do anything, you're not likely to get too far... it's a bad economy though... you want to take that into consideration before quitting...
This falls under the term hostile work environment and is covered under federal law. No one should have to work in a place that makes them uncomfortable like you are.
If it were me, the first thing that I would do would be to write down everything you can remember about what was said, by whom, and when. Like a journal. I'd do it on a computer and email it to yourself so you have a time stamped record of doing it.
Once that is done, I would talk to the boss/owner and let him know that the things that are being said around the office are offensive to you and you would like them to stop. Don't be confrontational or rude. Just tell him and see what happens. At that point, it is the bosses responsibility to make sure that that behavior stops.
If the behavior continues, continue to document it (if you have an mp3 player that records sound, that would be perfect. A small tape recorder would work too.)
You might mention it a second time to the boss, just to give him that last chance to do something about it. If it keeps on going, then I'd sue the bastards. Just look for a lawyer that specialized in employment law or harassment cases.
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Rascism at work.



Rascism at work.
I work with these guys and they are my bosses and they use so many racial slurs against black people and mexicans and it angers me to no extent. Sometimes I wanna knock them unconscious. I don't know whether to just quit or beat the holy hell out of...
them.