Justice Department: North Carolina's HB 2 Violates Federal Law

North Carolina's anti-LGBT House Bill 2 violates federal law, and the state must stop enforcing it or lose millions of dollars, the U.S. Department of Justice informed Gov. Pat McCrory today.

HB 2 conflicts with Title VII of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972, both of which ban sex discrimination, which includes discrimination based on gender identity, says a letter sent to McCrory by Vanita Gupta, principal deputy assistant attorney general, The Charlotte Observer reports.

HB 2, passed by legislators and signed into law by McCrory on March 23, prohibits cities from enacting or enforcing LGBT-inclusive civil rights ordinances, and bars transgender people from using the restrooms, locker rooms, and other single-sex facilities matching their gender identity, when those are located in government buildings, including public schools. It also prevents residents from suing for discrimination in state courts and forbids cities to set a minimum wage higher than the state's.

The Justice Department, headed by U.S. Attorney General Loretta Lynch (pictured above, right), did not approve of HB 2. "Access to sex-segregated restrooms and other workplace facilities consistent with gender identity is a term, condition or privilege of employment," Gupta wrote. "Denying such access to transgender individuals, whose gender identity is different from the gender assigned at birth, while affording it to similarly situated non-transgender employees, violates Title VII."

The law, she continued, "is facially discriminatory against transgender employees on the basis of sex because it treats transgender employees, whose gender identity does not match their biological sex, as defined by HB2, differently from similarly situated non-transgender employees." This means "the state is engaged in a pattern or practice of resistance to the full enjoyment of Title VII rights by employees of public agencies," she said.

Gupta gave McCrory until Monday to inform the Justice Department "whether you will remedy these violations of Title VII including by confirming that the state will not comply with or implement HB2." Similar letters, she said, have gone out to the North Carolina Department of Public Safety and the University of North Carolina "notifying them of our conclusion that they have engaged in violations of Title VII as well as violations of Title IX."

[RELATED: The Supreme Court Already Ruled on North Carolina's Law 20 Years Ago]

North Carolina public schools received $861 million in federal funds during the current school year, and the 17-campus University of North Carolina system got $1.4 billion in 2014-2015 -- funding that is threatened unless the state complies with U.S. law, the Observer notes.

The letter does not have the force of law but "effectively serves as a warning to the state to proceed at its own peril or risk being sued" by the federal government, the Associated Press reports. The state could also appeal to the Justice Department and seek to negotiate an agreement, but if this fails and the funding is withheld, North Carolina could sue the federal government, University of Richmond law professor Carl Tobias told the Observer. The letter puts"the ball in North Carolina's court," said Tobias, who has followed the HB 2 developments closely.

McCrory has yet to make a public statement on the Justice Department letter, and he could not be reached by the Observer. Other Republican leaders in the state were quick to condemn it, however.

"It looks an awful lot like politics to me," House Speaker Tim Moore told the Charlotte paper. "I guess President Obama, in his final months in office, has decided to take up this ultraliberal agenda." Senate President Pro Tem Phil Berger called it "a gross overreach ... that deserves to be struck down in federal court."

Lt. Gov. Dan Forest invoked the debunked "bathroom predator" argument in denouncing the Justice Department's action. "To use our children and their educational futures as pawns to advance an agenda that will ultimately open those same children up to exploitation at the hands of sexual predators is by far, the sickest example of the depths the ... administration will stoop to 'fundamentally transform our nation,'" he told the Observer.

LGBT rights activists responded with praise for the letter.

"This letter from the Department of Justice confirms what was clear from the start, HB2 is discriminatory and unconstitutional. We continue to call for the immediate repeal of HB2. We also call for the North Carolina General Assembly to pass full legal protections for the LGBT North Carolinians," said a statement issued by Jasmine Beach-Ferrara, executive director of the Campaign for Southern Equality.

"HB 2 is a discriminatory, dangerous piece of legislation and today the Department of Justice confirmed that it violates federal civil rights law," said a statement from Human Rights Campaign president Chad Griffin. "We commend the Justice Department for enforcing the rule of law and protecting the rights of North Carolinians. We once again urge Governor McCrory and the state of North Carolina to immediately do the same and fully repeal this harmful bill."

"The letter confirms what we've already known - that HB2 is deeply discriminatory, violated federal civil rights law, and needs to be repealed as soon as possible," added Equality North Carolina executive director Chris Sgro, who is also a state legislator. "We've already lost $500 million in economic impact and now we are violating federal civil rights law and risking Title IX funding. This is a travesty and embarrassment for North Carolina. There is a repeal bill filed in the House, and it should be considered immediately."

And the American Civil Liberties Union, the ACLU of North Carolina, and Lambda Legal, which are challenging HB 2 in federal court on behalf of six LGBT North Carolinians, released the following statement: "It is now clearer than ever that this discriminatory law violates civil rights protections and jeopardizes billions of dollars in federal funds for North Carolina. Governor McCrory and the legislators who forced through HB 2 in a single day were warned about these dire consequences, but they ignored the law and the North Carolinians it would harm and passed the bill anyway. The only way to reverse the ongoing damage HB 2 is causing to North Carolina's people, economy, and reputation is a full repeal."

This story is developing. Check back for updates.