This is a terrible situation! I'm so sorry! To use an old Navy expression, "loose lips sink ships!" Some things are just better kept to yourself, especially something like this!
JMO, but if it's your father in law, 1.) Drop any thoughts of "legal recourse"... I don't know what state you're in, but it's more likely than not you are an employee at will, meaning your boss can get rid of you because he didn't like the way you parted your hair this morning, if he wanted to. Also persuing this will just prolong you're anger, and increase your ill-will toward your father in law and vice versa. Your relationship as a family is far more important than your brief and unfortunate relationship as employer/employee
2.) The best way to prove your father in law was wrong AND to vindicate yourself, as well as repair your damaged self esteem, is to go out and find yourself a good job and then perform well at it.

3.) Five years from now (you'll just have to trust me on this, and I think those of us with 10 - 15 years of life experience on you will agree) this will be FAR less important than it is now...I'm not minimizing your feelings....but life has a funny way of putting things into perspective for you....and I promise you, it will
You have the opportunity to show your wife, your father in law and the rest of the family that you are a class act by forgiving your father in law and moving on as a family...I don't mean you have to go to him or anyone else and make any declarations, nor do you owe anyone an apology(unless you've said or done something since this all occurred...), just be the bigger man and move on with your life! If you move on, treat him as you did before all this happened, he'll be the one to look like the "best if kept off the boards" he is if he doesn't move on and treat you with respect
Good luck, and POST when you have that great job, ok?