PayPal scraps North Carolina expansion plan over state's LGBT law

An economic backlash broadened Tuesday against a North Carolina law that critics say discriminates against lesbian, gay, bisexual and transgender people with PayPal announcing it has canceled a major expansion in the state.

North Carolina has come under heavy criticism since Gov. Pat McCrory signed the law, requiring transgender people to use public bathrooms that match the sex on their birth certificates. The law, passed in response to a Charlotte ordinance that offered protections to gay and transgender people, also excludes sexual orientation and gender identity from the state's anti-discrimination law and bars local governments from expanding anti-discrimination rules.

More than 100 corporate leaders have decried the law, saying it is unfair and makes it more difficult to attract talent.

Just days before signing the law last month, McCrory personally attended PayPal's announcement that it was opening a new operation center in Charlotte, where he was once mayor. On Tuesday, the San Jose, California-based company said it was canceling the $3.6 million plan, which would have created 400 jobs.

"This decision reflects PayPal's deepest values and our strong belief that every person has the right to be treated equally, and with dignity and respect," the company said in a statement.

PayPal's announcement came days after Lionsgate decided to move the filming for the pilot episode of a comedy series to Canada. New Jersey-based Braeburn Pharmaceuticals also said it was reconsidering building a $50 million facility in Durham County projected to bring 50 jobs paying an average of $76,000 a year. The NBA raised doubts about whether it would continue plans to hold its all-star game in Charlotte next year.

But PayPal's decision isn't likely to lead to a wave of businesses fleeing the state, said Ryan McDevitt, a Duke University professor who studies how companies compete. Technology companies are particularly outspoken on social issues because they need to attract highly skilled and mobile employees while also appealing to younger customers, he said.

"They've built a lot of their brand or identity on the idea of being inclusive," McDevitt said. "I think this law in particular goes against that, and so no one wants to be seen as implicitly endorsing it by locating in North Carolina now if a segment of their employees and many of their customers are going to be affected by it."

One test of how upset some businesses may be comes in less than two weeks with the twice-a-year High Point Furniture Market, which brings 20,000 companies and about 75,000 people to the state. The market is responsible for about $5 billion in economic activity each year, organizers estimate.

A slow stream of buyers canceled trips to boycott the law, but few sellers have decided against coming, market spokeswoman Ashley Grigg said. The American Society of Interior Designers still plans its events at this year's market but said it will reassess its relationship next year if things don't change.

Red Ventures, a South Carolina-based sales and marketing company, is in the midst of a 500-job expansion in Charlotte. But the company "will not move forward with hiring in North Carolina until we understand what is happening with" the state law, spokeswoman Katie Zach said.

Red Ventures CEO Ric Elias said in a letter he has shifted his political support from McCrory to Attorney General Roy Cooper, a Democrat challenging McCrory in November. Elias and Cooper, who has said he would not defend the law against lawsuits, each issued statements calling for its repeal.

When asked about PayPal's move Tuesday, McCrory repeated earlier comments that he was open to improving the state law but said it was needed to counteract the Charlotte ordinance. The law's backers say it prevents men from molesting women in restrooms and locker rooms while claiming to be transgender. Opponents say that claim is bogus.

The law "was to ensure that that expectation of privacy would remain in our high schools and our universities and our community colleges," McCrory said. "For those who disagree with that basic norm, they have that decision to make."

A group that supported the legislation said PayPal pulled out despite being promised millions in incentives. The North Carolina Values Coalition said in a statement that "a company with its hands in the pockets of the taxpayers of North Carolina shouldn't insert itself into the bathroom policies of the state."