Official Explanation Kaplan :
Read the Original Sentence Carefully, Looking for Errors:With verbs like order, recommend, demand, require, etc. , what follows should be that and the infinitive form of the verb being demanded or required. In this case Laws require that …allow… to hire…is the correct form. Recognize the subjunctive verb form to increase your score on the GMAT. Here it appears the subjunctive is used incorrectly. Choice (A) is incorrect.
Scan and Group the Answer Choices:Choice (A) uses the incorrect verb form. Choices (B), (C), (D), and (E) use the correct verb form of allow. But only Answer Choice (C) combines the entire subjunctive correctly.
Eliminate Wrong Answer Choices:Choice (A) uses the incorrect verb form "allows".
Choice (B) does not use the correct form of the subjunctive mood and creates more errors by moving the word "that" from the beginning of the underlined portion to after the word "evidence" and by inserting the pronoun "they" before "can hire." Now the sentence does not make sense.
Choice (D) does not use the correct form of the subjunctive mood and creates an awkward, unclear structure due to the phrase "whose obtaining necessary evidence would otherwise be failing the hiring of."
Choice (E) does not use the correct form of the subjunctive mood and creates an awkward, unclear structure due to the phrase "whose necessary evidence would otherwise be failing the hiring of."
Answer Choice (C) uses the correct form of the subjunctive mood and is correct.