PayPal Holdings Inc. is scrapping plans to build an operations center in Charlotte, North Carolina, extending the fallout from legislation passed last month that bars transgender people from bathrooms and locker rooms that don’t match the gender on their birth certificates.
PayPal Chief Executive Officer Dan Schulman said the law undercuts the rights of lesbian, gay, bisexual and transgender people. The company is canceling plans to invest $3.6 million in the state and hire more than 400 people to work in a planned global operations centre.
"In our country, there’s no room for discrimination against any of our communities," Schulman said Tuesday in a telephone interview. "This law is against a core value of our company, which is inclusion. We felt it was important to back our words with actions."
PayPal’s reaction is the most concrete example of the financial consequences to North Carolina brought about by passage of the law. Last week, more than 80 CEOs and business leaders sent a letter to Governor Pat McCrory and the state’s general assembly urging them to repeal the law, saying it was bad for business. Schulman was among the CEOs who signed the letter. Other companies also have said they may cancel expansion plans in North Carolina as a result of the law.
McCrory, through a spokesman, declined to comment.
State Proposals
The legislation passed in North Carolina is no anomaly. There are about 200 proposed bills in 34 states this year that are considered potentially hostile to LGBT people, according to the Human Rights Campaign, which tracks such legislation and is among groups leading opposition to the North Carolina law known as HB2.
Governors in South Dakota and Georgia this year both vetoed legislation that attracted oppositions from corporate leaders. The South Dakota bill was similar to the North Carolina law in restricting accommodation for transgender people. The Georgia law was aimed at giving religious groups additional rights to deny services and jobs to LGBT people.
Mississippi, with a proposed law similar to the legislation in Georgia, may be the next battleground state on LGBT issues, according to Human Rights Campaign data. Mississippi’s governor signed a law Tuesday allowing businesses to deny services to gay couples based on the employers’ religious beliefs.
MGM Resorts International, which has two casinos in Mississippi, objected to the law, saying it will reduce tourism and harm the state’s economy. Nissan Motor Co., a large employer in the state, also objected to the law. International Business Machines Corp. and Levi Strauss & Co. are among national companies to use Twitter to voice objections to the Mississippi legislation.
There are 28 states in the US, including North Carolina, Georgia and Mississippi, where LGBT residents are not specifically protected from discrimination in the workplace or society. Those states represent about 54 per cent of US workers, according to US Bureau of Labor Statistics data.
The North Carolina law passed last month also prohibits cities from creating their own anti-discrimination policies. PayPal had announced plans in March to open a new global operations center in Charlotte and employ more than 400 people in skilled jobs, with its investment totaling more than $3.6 million by the end of 2017.
Vermont Governor Peter Shumlin issued an invitation Tuesday on Twitter for PayPal to invest in his state, referring to its history of tolerance. Numerous states have approached PayPal about the investment and company CEO Schulman said he will review those proposals as his PayPal waits to see if North Carolina moves to repeal the law.
"If they repeal the law and do so in the near future, we would still be happy to locate global operations center in Charlotte," he said.
Potential Loss
Red Ventures, a data marketing and technology company based in Fort Mill, South Carolina, is reconsidering an expansion of 500 jobs planned this year at its Charlotte location because of the passage of the law, CEO Ric Elias said in a letter to McCrory posted Tuesday on Twitter.
"We’re hopeful HB2 is repealed because it’s the right thing to do. And if not, our long-term plans for aggressive expansion in North Carolina will change," Elias said in an e-mail.
Braeburn Pharmaceuticals is re-evaluating its options to build a manufacturing and research facility in North Carolina because of the transgender law, the closely held company said in a statement. Braeburn had announced plans for a $20 million investment that would create about 52 jobs over the next five years.
PepsiCo Inc.’s Chief Executive Officer Indra Nooyi also sent a strongly worded letter to McCrory last week, disparaging the North Carolina bill and citing the company’s long history with the state. The Purchase, New York-based soft-drink giant was founded in North Carolina in the 1890s.
"Making sure this great state remains a place where businesses and individuals feel welcomed, valued and empowered to thrive is surely an area of common ground," Nooyi wrote. "However, I fear this law is undermining our collective efforts to advance North Carolina’s long-term interests and I hope you will consider calling for its repeal in the next legislative session."
The bill moved so fast that individual companies were just beginning to voice their objections when it passed, said Chris Fitzsimon, director of NC Policy Watch, a Raleigh group opposed to the law.
"This is a watershed moment in North Carolina politics," Fitzsimon said.
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