HOUSTON—A jury in federal court on Friday dispatched a high-profile lawsuit against KBR Inc. brought by a former employee, finding she wasn't sexually assaulted by a co-worker while working for the defense contractor in Iraq in 2005.

Jamie Leigh Jones, 26 years old, had claimed she was drugged and subsequently raped by former KBR firefighter Charles Bortz just three days after arriving in Baghdad's Green Zone.

She...