I can't believe he won't just hire a couple extra people instead of refusing sales. Bad business model.
As others have pointed out, current government rules and regulations make that a HUGE liability. My boss would rather pay me and my co-workers for 50 hour weeks rather than take the risks associated with hiring new employees.
The last 20 years of government has done this to our economy, where expansion of profitable businesses is not undertaken because of the liabilities created by government. When paying bribes to Chinese officials every week is cheaper and easier than doing business in the US that should tell you something about the US regulatory environment.
There is method to this madness of course, its real purpose is to protect the large firms, who write/influence the regulations, from competition from smaller start-ups. Start up companies can't afford the legal start up costs, so they never get started or never grow. The big firms simply pass these costs onto their customers, since they have squished anyone who might actually compete against them.