Officials from the US Justice Department notified North Carolina Gov. Pat McCrory that his state’s so-called bathroom law violates the US Civil Rights Act, according to The Charlotte Observer.
The law in question prevents local governments in North Carolina from passing nondiscrimination ordinances, and bans transgender people from using the bathroom that corresponds with their gender identity.
It quickly swept through the state Legislature in a one-day special session in March and was signed by McCrory hours later, sparking a national backlash from business leaders and LGBT activists.
According to The Observer, the Justice Department’s letter says that the state’s law violates Title VII of the Civil Rights Act of 1964, which bars employers from discriminating, and Title IX, which outlaws discrimination in education based on sex.
State officials have until Monday to confirm “that the State will not comply with or implement” the law.
If the determination is upheld, it could cost the state millions of dollars in federal school funding, The Observer reports.
Since its signing, the law has received fierce opposition from businesses around the country. PayPal and Deutsche Bank froze major expansions in the state in April, costing the North Carolina 650 jobs. The NBA has threatened to move its 2017 All-Star Game from Charlotte if the law remains unchanged, and the NCAA has said that the law jeopardizes the state’s chances of hosting future events, including the men’s basketball tournament.
Several entertainers, including Bruce Springsteen, Pearl Jam, and Ringo Starr, have canceled performances in the state in protest of the law.
The law overruled a Charlotte ordinance passed in February that added gay and transgender people to the list of protected classes in the city. Opponents of the ordinance latched on to the provision relating to bathroom preference, claiming that it would leave children vulnerable to sexual predators.