This would be a very strange question to be asked of an interviewer.
> Yes it means I can't hire employees in California
Per the article I linked to up-thread, it's not just CA:
California, Colorado, Louisiana, Minnesota, Missouri, Nebraska, Nevada, South Carolina, West Virginia, Seattle, Ann Arbor, and Madison.
Maybe you don't care about some of those locations, but CA, CO, and Seattle seem like pretty important ones in the tech world.