Anything preventing merchants from directly dumping their bitcoin for fiat sounds good for bitcoin in the long run. We need more merchants to reuse bitcoins rather than dump for fiat.
And what can you do to prevent that from happening? You can either prohibit it (stupid) or give merchants incentives to keep their Bitcoins instead of dumping their for their local fiat (so far not very productive unless you want simply to hold and speculate with the price).
If the merchants accepting bitcoin would pay their employees in bitcoins (in full, or partially) that would reduce the dumping to some degree. I think that's what he meant.
Sure, the employees could convert to fiat on the same day, but it's more likely some of them would decide to hold, especially if they opted to be paid in bitcoins voluntarily.