North Carolina pays price for discrimination as PayPal bails with 400 jobs

Stuart Lauchlan Profile picture for user slauchlan April 5, 2016
PayPal was all set to invest in North Carolina, but no longer will in the face of anti-gay discrimination laws. There's a price tag on bigotry.

Dan Schulman

Last month, North Carolina Governor Pat McCrory was basking in the reflected glory of wooing PayPal to the state to set up a $3.6 million global operations center, boasting:

Today’s announcement means that we can add another prominent name to the state’s growing list of technology businesses with major operations here.

But since then, McCrory has signed off on anti-LGBT legislation and yesterday the state of North Carolina paid a high price.

PayPal made good on its threat to cancel plans to open its global operations center in Charlotte, costing the state 400 jobs, specifically citing the signing into law of House Bill 2 (HB2).

HB2 excludes sexual orientation and gender identity from the state's anti-discrimination law, requires transgender people to use public bathrooms that match the sex on their birth certificates and bars local governments from expanding anti-discrimination rules.

CEO Dan Schulman announced his decision yesterday, stating:

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. Our decision is a clear and unambiguous one.

Becoming an employer in North Carolina, where members of our teams will not have equal rights under the law, is simply untenable. While we will seek an alternative location for our operations center, we remain committed to working with the LGBT community in North Carolina to overturn this discriminatory legislation, alongside all those who are committed to equality.

PayPal’s decision follows a commitment last week by Google Ventures not to invest in North Carolina while House Bill 2 remains in law.

Massed CEOs

Schulman was one of 90 tech CEOs who put their names to a letter condemning the signing into law of the Bill by Governor, including Salesforce CEO Marc Benioff, Apple CEO Tim Cook, Airbnb CEO Brian Chesky, Uber CEO Travis Kalanick, Twitter CEO Jack Dorsey, Google CEO Sundar Pichai, PayPal founder Max Levchin and Facebook CEO Mark Zuckerberg. In the letter, the CEOs warn:

The business community, by and large, has consistently communicated to lawmakers at every level that such laws are bad for our employees and bad for business. This is not a direction in which states move when they are seeking to provide successful, thriving hubs for business and economic development.

Republican Senator Phil Berger, who authored HB2, appeared to be in denial about the consequences yesterday, blaming Charlotte Mayor Jennifer Roberts for PayPal’s decision, despite the payments firm explicity citing HB2 as the reason for its withdrawal.

His argument appears to be that Roberts and the city council approved giving gay residents expanded legal protections for gays and lesbians and gave transgender residents the right to use the restroom conforming with their gender identity, thus forcing Berger to push his 'religious freedom' through.

In a statement, he said:

If Jennifer Roberts, Roy Cooper and the far-left Political Correctness Mob she’s unleashed really care about the economic future of her city, they’ll stop the misinformation campaign immediately … before more damage is done.

On signing HB2, the Governor insisted businesses would not withdraw from North Carolina as a result, blaming the media:

I haven’t heard them threaten to leave. This is another example of the media exaggerating. I have not had one corporation tell me that they’re threatening to leave.

Yesterday the Republican Party in North Carolina was in full damage control mode, with Vice Chairman Michele Nix questioning PayPal’s ethics:

So after PayPal was forced to settle after violating economic sanctions on Cuba, Sudan, and Iran, and even processed payments for someone looking to buy nuclear-weapon technology on the black market, the California-based company now has a problem doing business in North Carolina?

This is corporate hypocrisy and bullying at its worst, and as a working mother I’m proud to live in a state that stands up for the privacy and safety of women and children by overturning an ordinance pushed by a convicted sex offender to allow men into women’s restrooms.

My take

Nix’s statement is the poisonous venom of a legislator who backed the wrong horse and believed she’d get away with it.

This is a genuinely ‘money where your mouth is’ moment from PayPal - and the first example of a tech company taking action to back up its stance. (In Georgia and Indiana, Salesforce was spared having to follow through by reverse-turns by those states governors.)

Attention is now turning to Mississippi where Governor Phil Bryant has just signed into law the most extreme ‘religious freedom bill’ to date. Whether events in North Carolina will set alarm bells ringing there remains to be seen, but I’m not going to be holding my breath. But with IBM, Microsoft and Salesforce having already spoken out and other tech leaders following, the pressure will be on there.

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