Client Alert: New Hampshire Enacts New Restrictions on DEI in Schools and Public Entities

CLIENT ALERT

By Attorney Amy Crafts

Recently enacted legislation establishes restrictions on diversity, equity and inclusion (“DEI”) initiatives in a variety of settings, including New Hampshire’s public schools, private schools receiving public funds, and public entities. Effective July 1, 2025, the new law makes clear that “[n]o state funds shall be expended for DEI-related activities, including but not limited to implicit bias training, DEI assessments, critical race theory, or race-based hiring, promotion or contracting preferences.” See RSA 21-I:113; RSA 186:72.

While making efforts to comply with these restrictions, schools and state agencies (not “public entities” – a term undefined by the legislation) must also submit reports in the coming weeks that, among other things, identify all contracts with DEI-related provisions, provide descriptions of any DEI-related provisions, and list the total financial obligation associated with each contract. Schools must provide this information along with a signed certification to the New Hampshire Department of Education (“NHDOE”) and state agencies must provide this information to the New Hampshire Department of Administrative Services (“NHDAS”). In fact, both NHDOE and NHDAS have sent correspondence requesting these reports and, in some instances, are requiring submission prior to statutory deadlines. Once the information is provided, NHDOE and NHDAS must each compile a consolidated report that will ultimately be submitted to the Governor and other state officials “detailing the progress . . . in eliminating DEI-related provisions from contracts.” See RSA 186:76.

For a variety of reasons, schools and public entities should exercise caution in their efforts to comply with these new requirements. First, because the statutory language is broad, schools and public entities should ensure they are casting a wide net when identifying documents to review for compliance. DEI is defined in the new legislation to include “any program, policy, training, or initiative that classifies individuals based on [protected characteristics] for the purpose of achieving demographic outcomes, rather than treating individuals equally under the law.” See RSA 21-I:112, II; RSA 186:71, I. Although the legislation requires NHDOE and the New Hampshire Department of Justice to develop and promulgate rules prior to enforcing the law, no rules have been submitted for review.

Second, failure to comply with the new law may result in revocation of public funding. Specifically, a determination by NHDOE that a school has violated the new DEI restrictions “shall immediately halt all sources of public funding to that public school.” See RSA 187:77, I (emphasis added). In addition, restoration of funding requires certification of compliance by the commissioner of NHDOE, likely involving a time-consuming process.

Third, “public schools”, defined by RSA 186:71, II as “any school, academic institution, or institution of higher education in the state supported by public funds”, should be particularly cautious in providing certified reports to NHDOE. As an initial matter, the statutory definition of “public schools” appears to be at variance with the attempt to apply these requirements to private colleges and schools, which have received requests that they comply.

In addition, “public funds” is not defined and could refer to state or federal funds, including where NHDOE acts as a pass-through distributing federal funds to school districts. As discussed in a prior client alert, certifications are a key tool used by the federal government to prove violations of the False Claims Act. In the context of this new law, if a school receiving federal funds submits a DEI-related certification that is not completely accurate, the certification could be the basis for a federal investigation, potentially resulting in significant financial penalties.

Litigation related to this new law is pending in the District of New Hampshire and challenges these new restrictions on a variety of bases. Notably, the lawsuit seeks a preliminary injunction to enjoin enforcement of the new DEI restrictions as well as enjoin the reporting and certification requirements. An expedited briefing schedule on the preliminary injunction has been set, with oral argument to occur this week. See National Education Association-New Hampshire, et al. v. Formella et al., Case No.: 25-cv-293.

Sheehan Phinney will continue to monitor these developments and is prepared to assist clients in reviewing materials for compliance and interfacing with state and federal enforcement authorities. If you have questions about these developments and how they may affect your organization, please contact Amy Crafts or another member of Sheehan Phinney’s Government Investigations or Employment Practice Groups.

Amy Crafts is a member of Sheehan Phinney’s Government Investigations and Healthcare Practice Groups and previously served as Chief of the False Claims Division at the Massachusetts Attorney General’s Office.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.