On October 29, 2025, the Minnesota Supreme Court provided an important clarification about the use of unemployment insurance benefit materials in disputes with employees in McBee v. Team Indus., Inc., No. A23-1879 (Minn. 10/29/25). In McBee, the Court ruled that “information created or generated solely” by an employer for the purpose of reviewing an application for unemployment insurance benefits is “absolutely privileged”, and therefore inadmissible for any purpose in any civil proceeding held outside of that administrative case. McBee is an interesting case stretching several years that has set new precedents under the Minnesota Human Rights Act (“MHRA”) for accommodations in the first appeal before the Minnesota Supreme Court in 2019 (which has since been overturned by amendment), and now in the interpretation for when unemployment insurance benefits materials are permissible in other disputes.

Background:

The basis of these various lawsuits stem from the employee obtaining work restrictions due to back problems with nerve-related symptoms a few months into her employment. Shortly thereafter, the employee alleged she was terminated without the employer attempting to provide the employee with accommodations. After termination, the employee filed a claim for unemployment insurance benefits with the Minnesota Department of Employment and Economic Development (“DEED”) based on her former employer’s alleged failure to reasonably accommodate her disability, and she sued under the MHRA for failure to provide reasonable accommodations and disability discrimination. The materials submitted to DEED in response to the employee’s claim by the employer were excluded from trial in 2019 under Minn. Stat. 268.19, subd. 2(c), which states that such information and documents “are absolutely privileged and may not be made the subject matter or the basis for any civil proceeding, administrative or judicial.” The employee wanted the DEED materials included at trial, which included information provided by the employer regarding the reasons for the employee’s termination.

Appeal:

The issue of providing accommodations was the subject of the first appeal, in which the Court made a significant diversion from the federal Americans with Disabilities Act (“ADA”) in holding that under the MHRA, an employer is not required to engage in the interactive process with an employee to determine what type of reasonable accommodation may allow an employee to perform the essential functions of the job without undue hardship to the employer. McBee v. Team Indust., Inc., 925 N.W.2d 222 (Minn. 2019). However, in direct response to this decision, the MHRA was amended by the Minnesota legislature in 2021 to require an employer to engage in an interactive process like the ADA.

In the latest appeal, the Court reviewed the inclusion of the materials provided to DEED by the employer and whether they were properly excluded from this disability discrimination case filed under the MHRA. The Minnesota Court of Appeals had previously affirmed the district court’s decision to exclude the materials based on Minn. Stat. 268.19, subd. 2(c). McBee v. Team Indus., Inc., 9 N.W.3d 592, 599 (Minn. App. 2024). The employee argued that under the statute, “absolutely privileged” should be interpreted as “complete immunity against defamation claims” which would stop “employees from filing defamation claims against employers based upon the information they submit to DEED in connection with unemployment benefit applications.” The employer argued that “absolutely privileged” under the statute should be interpreted as “precluding employees from offering into evidence any information that an employer submits to DEED in connection with unemployment benefits applications in any future claim.”

Upon its review, the Court held that “absolutely privileged” as used in Minn. Stat. 268.19, subd. 2(c) is an immunity from liability, but not a rule of inadmissibility. This means that the statute “shields an employer from liability for information it has communicated to DEED when that information is obtained by DEED ‘in order to determine an applicant’s entitlement to unemployment benefits’ and later ‘made the subject matter or the basis for’ a civil proceeding.’” However, as applicable to the McBee case, since the DEED materials were not the “subject matter or the basis for” the employee’s claim, the Court ultimately determined that the DEED materials should have been included in evidence but would not have changed the outcome of the decision of whether the employee was discriminated against in her termination.

The McBee case clarifies the interpretation of the applicable statute for immunity from liability for employers in this context, and also reminds employers of the importance of proper and correct documentation throughout the employment process if unemployment materials could end up being admitted in a dispute.

Updates and changes to Minnesota law may be difficult or complex to sort through and apply to your employees. If you have questions about labor and employment law or your company policies, please contact our Labor & Employment attorneys at (651) 439-2878.