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PayPal CEO nixes North Carolina expansion over transgender law

The company's decision is the latest fallout over a controversial law mandating which bathrooms transgender people can use.

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PayPal CEO Dan Schulman says the company will keep working to repeal the North Carolina law.

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PayPal wants North Carolina to pay for its decisions.

The online payments company said Tuesday it will scrap plans to open a new 400-person global operations center in North Carolina, a direct response to a controversial new state law that forces transgender public school and university students to use bathrooms according to their biological gender.

"The new law perpetuates discrimination and it violates the values and principles that are at the core of PayPal's mission and culture," CEO Dan Schulman said Tuesday in a statement. "As a result, PayPal will not move forward with our planned expansion into Charlotte."

PayPal's decision adds to the fallout in North Carolina since the law was passed late last month. Schulman was among more than 90 business executives who spoke out against the law in a letter sent to Gov. Pat McCrory's office last week. Several companies have also moved to curb their business with the state, including filmmaker Lionsgate pulling production of a new Hulu show from Charlotte. Additionally, a federal lawsuit was filed last week, claiming that law violates the US Constitution, and the Obama administration is weighing whether to cut billions of dollars in funding to the state.

PayPal just two weeks ago revealed plans to employ more than 400 people at the new center.

Gov. McCrory's office didn't respond to a request for comment.

The lawsuit comes as Georgia Gov. Nathan Deal last month vetoed legislation in his state that would have strengthened legal protections for opponents of same-sex marriage. Deal killed off the bill after a public outcry and threats from major companies, including Salesforce.com, to take their business elsewhere. Amid the controversy, Mississippi Gov. Phil Bryant on Tuesday signed into law a similar religious freedoms bill. Many of these efforts have come as a response to the US Supreme Court's ruling last year that made same-sex marriage a right nationwide.

"PayPal made a wise decision to not put 400 of their employees in a state that might discriminate against them," said Eliza Byard, executive director of the national nonprofit GLSEN, the Gay, Lesbian & Straight Education Network. "It's another indication, coming through loud and clear, that discrimination is bad for business, it's bad for communities."

Schulman, a former American Express executive who became PayPal's CEO after it split from eBay last year, said his company will seek an alternative location for its operations center. He added that PayPal is committed to working with the lesbian, gay, bisexual and transgender community in North Carolina to help overturn the law.

"Becoming an employer in North Carolina," Schulman said, "where members of our teams will not have equal rights under the law, is simply untenable."

Update, 2:27 p.m. PT: Adds comment from GLSEN's Eliza Byard.