Accused: Michael Douglas (shown with wife Catherine Zeta-Jones at a movie screening in NYC) has come forward to shut down claims that he masturbated in front of a former employee 32 years ago

Michael Douglas has sensationally come forward to deny that he sexually harassed a woman 32 years ago.

The double Oscar winner spoke to Deadline after he says he was approached by The Hollywood Reporter who provided the claims from the woman to him.

The star says the woman, a blogger, alleged he masturbated in front of her - and he's coming forward now as his children are terrified the 73-year-old will be labeled a sexual predator.

In the new interview, Douglas says 'he felt the need to get ahead' of the 'cautionary tale'.

The Wall Street star revealed he was approached about the allegations just before Christmas - and on the same day his son Dylan was accepted to college.

'When we were all ecstatic... (then) I got a message from my attorney that The Hollywood Reporter wanted to do a story about an employee that worked for me approximately 32 years ago,' Douglas told Deadline.

Scared: Oscar winner Michael Douglas (pictured last year in India with his wife, Zeta-Jones and two kids, Dylan and Carys) says he came forward because his kids are concerned their father will be labeled a sexual predator

Protective: Michael Douglas says his children (son Cameron, left, and son Dylan) were embarrassed and upset

Supportive: Douglas said his wife Zeta-Jones (pictured with her father-in-law and Golden Globes presenter Kirk Douglas on Sunday, the accused Michael Douglas not present) has his back

'She claims that, one, I used colorful language in front of her, not at her, but that I used colorful language.

'Two, she claims that in conversations I had in front of her, on the phone, that I spoke raunchily, or dirtily with friends of mine, in private conversations,' Douglas says.

'I fired her eventually... for the work she was doing, (but) three, she claims that I blackballed her from the industry and stopped her form getting another job.'

Finally, Douglas says the allegations that he masturbated in front of her are far from the truth.

'This is a complete lie, fabrication, no truth to it whatsoever.'

The reporter who approached him also informed that the woman confirmed she was never touched, or, in her words, 'harassed' by Douglas.

The actor then replied, 'okay... so I didn’t know where this comes from.'

Around the same time, the now father-of-three had been producing and filming for the 1985 action romance, 'The Jewel of the Nile'.

He said that, throughout his career, he's prided himself in keeping a good reputation in the business.

'It’s extremely painful,' Douglas went on. 'I don’t have skeletons in my closet, or anyone else who’s coming out or saying this.'

He suggested that while the accuser might still be 'disgruntled' over her career fallout, he's disappointed his family is now left with the consequence of embarrassment and shame.

'The part that hurt the worst is having to share something like this to your wife and your children,' adds Douglas.

'My kids are really upset... have to go to school worrying this is going to be in some article about me, being a sexual harasser. They’re scared and very uncomfortable.'