Tech firms need to ‘evaluate’ ties to Indiana: PayPal founder

PayPal founder and Affirm CEO Max Levchin is speaking out against Indiana's "religious freedom" law and encouraging other Silicon Valley executives to examine their connections to the state.

"I encourage Paypal's new CEO and other CEOs in Silicon Valley to evaluate their relationship with the state of Indiana," he told CNBC's "Squawk on the Street" on Monday. "If local laws and bills say that it is OK to discriminate, you have to make sure that you are protecting your employees and you keep them safe and comfortable."

A national debate erupted over the weekend concerning an Indiana law that could potentially allow businesses to refuse services to certain people, like the LGBT community. Proponents say the legislation is meant to protect a business owner's right to freedom of religion. Opponents are worried that this could legalize a new wave of discrimination.

Levchin, like many others, is calling on Indiana Gov. Mike Pence to clarify the exact intent of the law.

Read More Religious Freedom Restoration Act: What You Need to Know

"More businesses in America will evaluate their relationship with Indiana and ask the question: How should we feel about this state that does not seem to oppose discrimination strongly and in fact enshrines the right to discriminate in the law?"

Levchin said that he wrote a note to his own employees urging them to speak up on this issue if they feel strongly about it.