She wrote: "Michael unzipped his chinos and I registered something amiss. Still complimenting my additions to our E.T. imitation, his voice lowered at least half an octave. I peered at him and saw he'd inserted both hands into his unzipped pants. I realised to my horror that he was rubbing his private parts. Within seconds his voice cracked and it appeared to me he'd had an orgasm."
Then, Braudy claims she immediately closed her notebook and headed for the door.
She explained: "I said nothing. I was surprised I wasn't falling to pieces even though I was humiliated. I realised he thought he could do anything he wanted because he was so much more powerful than I was. Michael ran barefoot after me to the elevator, zipping his fly and buckling his belt. 'Hey, thank you, you're good. You helped me, thank you, thank you.'"
But Braudy says that her relationship with the actor collapsed in the months thereafter, and she was ultimately let go in late 1989.
She wrote: "When he sweetly asked me to sign a confidentiality agreement, I knew Michael was preparing to fire me.
"'Don't sign,' my lawyer Leon Friedman said. 'Keep saying your lawyer is out of town.' So Michael waited six months for my lawyer 'to return.'"
Douglas has already denied the allegations, issuing a preemptive statement in which he described the story as "an unfortunate and complete fabrication".
Speaking in reference to Braudy, his statement read: "This individual is an industry veteran, a senior executive, a published novelist and an established member of the women's movement - someone with a strong voice now, as well as when she worked at my company more than three decades ago.
"At no time then did she express or display even the slightest feeling of discomfort working in our environment, or with me personally. That is because at no time, and under no circumstance, did I behave inappropriately toward her."
The actor - who is married to actress Catherine Zeta-Jones - added: "Coarse language or overheard private conversations with my friends that may have troubled her are a far cry from harassment.
"Suggesting so does a true disservice to those who have actually endured sexual harassment and intimidation."