The 73-year-old actor said he may have used colourful language but other claims alleged by a former employee are untrue.
"I will fess up to colorful language, but the issue of masturbating in front of her? That rung is something I've only heard about the last year. It's not an expression that related to the '80s. So I thought it stunk," Douglas told Deadline.
He is married to actor Catherine Zeta-Jones.
"The Game" star said two publications were competing to publish the story and instead of waiting around for the article to appear in print, he decided to take charge of the situation.
"I felt the need to get ahead of this. It pertains to me but I'm also getting a sense of how it reflects in our culture, and what is going on today. I see it as a cautionary tale," he explained.
"I had the choice of waiting for a story to come out, one that will clearly get picked up by other newspapers and magazines, and then I have to sit there and try to defend myself. Or, try to share with the public, a little ahead of the story, my thoughts and concerns," he said.
The actor, however, said it was difficult for him to come to terms with the decision to go public.
"It's extremely painful. I pride myself on my reputation in this business, not to mention the long history of my father and everything else. I don't have skeletons in my closet, or anyone else who's coming out or saying this," he said when asked what was his first reaction when he was told about the accusation by other publications who were investigating the claims.
Douglas said the most hurtful part was to share this with his wife and children.
"My kids are really upset, (they have had) 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," he said.
"Again, I am sorry if I used coarse language with my friends. But this is really debilitating. It can have a large effect on my career. And also, I think it really sends a message out."
The actor said the ex employee may have been angry with him for letting her go and added up other allegations to get into print.
While Douglas believes in the #MeToo movement, he said being accused of something without a chance to defend himself worried him.
"I support the #MeToo movement with all my heart. I have always supported women, along the way. This is the kind of step that can set that movement back," Douglas said.
"Being accused, without a chance (to defend yourself) in court. To not even really have the information in front of you, to be able to argue or defend yourself. There is no due process, no chance of seeing evidence in front of me from my accuser. It worries me.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)