No you are reading it correctly.
You can e-file the return and the State of CA can still ask for it to verify it, however you did e-file correctly.
The states (especially CA it seems) can do these checks just to make sure it is correct, so I would e-file just like you have in the past (and have a copy of MI ready should they ask for it).
Some file Federal returns (e-file) and IRS calls employers to verify the W-2 is correct. Just a method of ensuring they are not issuing refunds when they should not be.
