A Look at NC 'Bathroom Bill' as DOJ Deadline Looms

The U.S. Department of Justice warned North Carolina this week that it's in jeopardy of losing federal funding because of a new state law banning people from using bathrooms that don't match the sex indicated on their birth certificate.

The law violates a number of civil rights laws, including the U.S. Civil Rights Act and Title IX, according to the Justice Department. Critics add that it is specifically anti-LGBT.

"[We] have concluded that in violation of Title VII, the state engaged in a pattern or practice of discrimination against its employees and both you and the State are engaged in pattern or practice of resistance to the full enjoyment of Title VII rights by employees of public agencies," Vanita Gupta, principal assistant attorney general, wrote in a letter to North Carolina Gov. Pat McCrory.

DOJ has given North Carolina until the close of business Monday to comply.

Until then, here's what you need to know:

The State's ResponseN.C. House Speaker Tim Moore says the legislature won't meet the DOJ deadline.

"It was a very tight deadline that was given, that frankly was unreasonable. In all candor, with all due respect, we think that the Obama administration is playing politics and it shouldn't. The legislative process doesn't work where a response can be given by just a few days," Moore, a Republican, told reporters Thursday in a video posted by the Raleigh News & Observer. "We will take no action by Monday. That deadline will come and go."

The Effects on North CarolinaThe law has drawn the ire of LGBT groups, celebrities and activists since the governor signed it into law in March.

University of North Carolina President Margaret Spellings warned that "significant federal funding" is at stake if the state keeps the law in place.

"I have contacted state leaders and advised them that this law is sending a chill through the University of North Carolina," she said in a statement before DOJ sent warning letters this week to the governor, the University of North Carolina and the state Department of Public Safety.

In addition to a federal action, she said, major conferences scheduled to be held by the university have been delayed or canceled.

Major companies have also halted expansions planned for the state, and several entertainers have canceled performances.

Deutsche Bank announced in April that it was freezing plans to create 250 new jobs at its Cary, North Carolina, location because of the law. In April, PayPal also said that it was halting a planned expansion in Charlotte.

"The new law perpetuates discrimination and it violates the values and principles that are at the core of PayPal's mission and culture," PayPal CEO Dan Schulman said.

Bruce Springsteen made headlines when he canceled his show last month in protest of the law.

What's Next?The Justice Department said that it hopes North Carolina will voluntarily comply with federal law, according to sources.

DOJ prefers to ask for voluntary compliance by recipients of federal money so that they can continue to receive funds.

But DOJ pointed out that it has a range of tools to seek compliance, including a court order.

According to ABC News' Supreme Court contributor, Kate Shaw, any lawsuit brought by DOJ could be complicated by the fact that North Carolina Attorney General Roy Cooper has stated that he will not defend HB2 in any legal challenge.

"Such refusals to defend by state officials, though rare, do occur; here, either the governor or the legislature itself would likely hire separate counsel to defend the law," Shaw said.

ABC News' Mike Levine contributed reporting.