I could think of ways one could implement something like this without too much effort. However only of ways that only look like they provide additional security.
For example you could write a program that generates a unique id every time it is started and submits this id to the website every x seconds and also displays the id to the user. To log in the user has to submit a valid key in additon to his login details. If the id is no longer submitted from the program to the website the users session is terminated. The program also checks every x seconds if the USB stick is still plugged in, and if not stops submitting the id.
Something like this.
Does your boss want additional security or does he only want to look cool with his USB stick and have the USB stick as some insignia of power? Like keys to the CEO restroom?