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Two seemingly unrelated events on LGBT rights happened last week that upon a closer look had significant bearing on each other.

On one hand, the University of North Carolina system declared it would comply with the newly enacted anti-LGBT measure known as House Bill 2, which prohibits transgender people in the state from using public restrooms consistent with their gender identity. University of North Carolina President Margaret Spellings, known for expressing anti-LGBT views as a former official in the Bush administration’s Department of Education, announced the change in a Q&A guidance to chancellors.

On the other hand, the one-year anniversary of the effect date of President Obama’s Executive Order 13672, which bars federal contractors from engaging in anti-LGBT workplace discrimination, passed. Any contractor who entered new agreements to do at least $10,000 a year in business with the U.S. government since April 8, 2015, is subject to the anti-bias rules under the order.

The events are related because, as a Washington Blade investigation discovered, the University of North Carolina is a federal contractor. Therefore, the school system could be subject to penalties if it discriminates against LGBT workers, such as by complying with HB 2 and prohibiting trans workers from using restrooms consistent with their gender identity.

According to USASpending.gov, the University of North Carolina won more than $2 million in federal contracts between 2008 and 2016. For each fiscal year from fiscal years 2010 through 2016, the university won more than $10,000 in federal contracts, which surpasses the financial threshold of having to meet requirements under Executive Order 13672.

One contract in particular awarded on June 22, 2015, after the effect date of the executive order, is valued at $13,090, which is enough to trigger penalties under the executive order. The National Institutes of Health awarded the contract to the University of North Carolina, Chapel Hill, for medical and laboratory testing.

The U.S. Department of Labor is among the agencies conducting a review of HB 2, which may result of a loss of federal funds for the state. Critics say the law contravenes Title VII of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972, but the review at the Labor Department could also take into account whether the University of North Carolina is in violation of Executive Order 13672.

Tico Almeida, president of the LGBT group Freedom to Work, said the University of North Carolina’s announcement that it’ll comply with HB 2 gives the Obama administration the authority to investigate the school under the executive order.

“Executive Order 13672 is an important cornerstone of President Obama’s historic legacy on LGBT equality,” Almeida said. “Now that the UNC system is perhaps the only federal contractor in the country to affirmatively announce to the public that it discriminates against transgender Americans, the Labor Department has the legal authority to begin an investigation and take enforcement action under President Obama’s LGBT executive order.”

Joni Worthington, a University of North Carolina spokesperson, said although the university intends to comply with HB 2, nondiscrimination policies within the school system, as noted in guidance announcing the change, would “remain fully in effect.”

“Some of the questions that have been raised about how House Bill 2 and the federal requirements or federal regulations may have to be determined in court,” Worthington said. “But certainly the university and the president have also made it clear that providing factual information about what House Bill 2 requires is not the same thing is in no way an endorsement of the bill.”

One person who could seek relief under Executive Order 13672 is the lead plaintiff in the pending lawsuit against HB 2 filed by Lambda Legal, the American Civil Liberties Union and the ACLU of North Carolina. Joaquín Carcaño is an employee at the University of North Carolina, Chapel Hill, and suing the state and the university on the basis that HB 2 violates his equal protection rights under the U.S. Constitution and Title IX.

Kyle Palazzolo, a staff attorney with Lambda Legal, deferred to the Obama administration’s ongoing review when asked if Carcaño’s attorneys would file a complaint with the Labor Department under Executive Order 13672 in addition to the federal lawsuit.

“We understand that several federal departments are reviewing the impact of HB 2 on federal funding to North Carolina, and we hope that the legislature will take heed and fully repeal HB 2 when they return to session later this month,” Palazzolo said.

Even if Obama hadn’t signed Executive Order 13672, the University of North Carolina could face penalties under Executive Order 11246, the federal contractor workplace nondiscrimination order signed by President Lyndon Johnson in 1964. In 2014, the Labor Department announced it would interpret the prohibition on gender discrimination in that order to apply to trans workers.

Another course of action, as Buzzfeed reported last week, is the U.S. Equal Employment Opportunity Commission, the agency charged with enforcing federal employment civil rights law. As lesbian EEOC Chair Chai Feldblum pointed out, the commission stands “ready” to accept complaints from trans North Carolinians who suffer discrimination as result of HB 2, which could include workers at the University of North Carolina. The agency accepts clams of trans discrimination as allegations of gender discrimination under Title VII.

But the Labor Department, according to Almeida, has authority under the executive orders that is different from EEOC’s under statutory law because those orders enable the Office of Federal Contract Compliance to investigate federal contractors without the filing of any complaint beforehand. In February, for example, the agency filed a lawsuit under Executive Order 11246 alleging B&H Foto & Electronics Corp. was discovered to have discriminated against Latino employees as well as female, black and Asian jobseekers at its Brooklyn Navy Yard warehouse after a compliance review.

“One advantage of the federal contractor executive order is that the Labor Department can engage in compliance reviews before an effected worker files a complaint of discrimination, and that means UNC could become the first, or one of the first contractors investigated for anti-LGBT discrimination since President Obama’s executive order went into effect one year,” Almeida said.

In the week before the one-year anniversary of the executive order taking, the Labor Department declined the Blade’s request to interview Patricia Shiu, director of the Office of Federal Contract Compliance Programs, nor provide information despite multiple requests on how many times the Executive Order 13672 has been invoked in the past year, whether the administration is proactively investigating federal contractor for potential anti-LGBT discrimination or to confirm the order would apply to the University of North Carolina.

Almeida declined to comment on whether he had knowledge of whether or not the Labor Department is investigating federal contractors without complaint under the executive order against anti-LGBT workplace discrimination in the same way it is enforcing the executive order prohibiting discrimination against other protected classes of workers.

“All of these types of enforcement actions by the Labor Department would be a strong compliment to the important federal court litigation that Lambda Legal and the ACLU have filed challenging the discriminatory North Carolina legislation all together,” Almeida said. “Moreover, it any LGBT worker faces workplace discrimination at UNC or any other employer in the state, we encourage them to consult an attorney and file Title VII claims with the EEOC under Macy v. Holder and Baldwin v. Foxx.”

But those courses of action prohibit discrimination against workers, not students, so trans students who face discrimination at the University of North Carolina as a result of HB 2 won’t be able to use them to seek recourse. Among them is Payton McGarry, a University of North Carolina, Greensboro, student and co-plaintiff in the pending litigation against HB 2 suing on the basis of Title IX. A trans student could also file a complaint directly with the Department of Education under Title IX.

Dana Beyer, a Maryland-based trans advocate and board chair for Freedom to Work, took the University of North Carolina to task for its decision in the first place to comply with HB 2.

“Margaret Spellings, president of the University of North Carolina, has aggressively committed the university system to enforce HB 2, the anti-21st century law that singles out trans persons as the prime target of North Carolina-style governmental bigotry,” Beyer said. “She did this knowing full well that the state law is no defense against federal law, and puts the university at risk of losing its current and future federal funding. Most strikingly, she betrays a profound ignorance and unwillingness to learn about one of her state’s most vulnerable communities, a degree of anti-intellectualism that is stunning in a university president.”