It should be up to an employer to fill any position as they see fit. If they only want to hire people who are currently employed, that should be their perogative.
Once you go down that slippery slope there is no stopping.
I agree it should be up to the employer. However I think the practice is short-sighted. There are a lot of great people out their who need jobs and would be great employees. To operate this way isn’t a good practice, but that doesn’t mean I think the feds needs to create a law against it.