Responding to the criticism, Pat McCrory, the state's Republican governor, late on Tuesday signed an executive order that adjusted some of the controversial elements of the law but not the provision about bathrooms.
McCrory said the changes included expanding North Carolina's equal employment opportunity policy to "clarify that sexual orientation and gender identity are included". He also vowed to press the legislature to pass a law to "reinstate the right to sue for discrimination" in the state's courts.
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But the changes came under immediate fire from human rights groups. Human Rights Campaign said McCrory's action was an "insufficient response to a terrible . . . law that continues to harm LGBT people on a daily basis".
"It's absurd that he'll protect people from being fired but will prohibit them from using the employee restroom consistent with their gender identity," Sarah Warbelow, HRC legal director, said in a statement.
Mississippi last week passed legislation that allows private companies to refuse to serve gay and transgender people if doing so would violate their religious beliefs. However, the governor of Georgia vetoed a similar measure that had been passed by the state legislature after opposition from business groups and Hollywood.
The Republican party had hoped to avoid "culture war" issues in the 2016 election in order to attract more members and boost its chances of taking the White House. But it has been stymied by the southern states' initiatives and by the rise of the two main presidential rivals, Donald Trump, and particularly Ted Cruz, the Texas senator whose campaign has adopted a much stronger focus on social issues such as opposition to same-sex marriage.
The Mississippi and North Carolina laws have sparked a broad backlash from large companies across the US — from Apple to Goldman Sachs to Starbucks — which argue the measures are discriminatory and also hurt business by alienating some customers and making it more difficult to hire a diverse, talented workforce. More than 130 business leaders last week signed a letter expressing opposition to the North Carolina law.
Musicians have also expressed outrage. Bruce Springsteen canceled a concert in North Carolina because of the anti-LGBT law while Bryan Adams, the Canadian musician, decided not to perform in Mississippi.
The controversy comes a year after Indiana and Arkansas tried to introduce religious freedom laws that critics said were discriminatory towards gays. The Republican governors of both states were forced to weaken the measures after an outcry from corporations and less conservative states across the US.