i didn't read through all the comments but I relate to this post, my T hugs me every session end as well and i have big issues hugging him with an audience for the same reason as you, i feel I'm am doing something wrong.
we have talked it over many times, he is still doing it and its fine, i allow it but, i am still trying to work on my issues with an audience. in your case i would of been weirded out too but i sure would not stop
for me, he is the only human touch i get all week, i am kinda to a point where i look forward to it, and i know someday i wont care and ill hug him even if 10 people are watching
for sure talk to her.