Attorneys for Paula Deen said that the former worker suing for sexual harassment and being subjected to a hostile work environment is making false allegations.
Deen's camp says Lisa Jackson only made the claims after rebuffing attempts to resolve the matter amicably, and after the chef refused to pay her to keep quiet.
The lawsuit, filed Monday, "makes false allegations against Paula Deen and they will be proven false in court," said a statement from the firm representing Deen.
The law firm said the suit was filed in a local court after the Southern cooking star and Type 2 diabetic refused to pay the woman to "address false claims."
Attorneys for Jackson, a former general manager at the restaurant, didn't immediately respond to an email seeking comment regarding Deen's rebuttal.
Jackson said her doctor encouraged her to quit managing Uncle Bubba's Seafood and Oyster House in Savannah, Ga., due to panic attacks and other stress.
The restaurant is owned by Paula Deen and her brother Bubba Hiers.
Jackson, who is white, said in the lawsuit that Hiers routinely made inappropriate sexual remarks and that she heard Heirs and Deen using racial slurs.The woman also said in court papers that she saw Hiers violently shake a black employee and that he "fostered a workplace environment of intimidation."
Deen's law firm said that she had investigated Jackson's claims and had unsuccessfully attempted to reach out and address them with her.
"She has made baseless, inflammatory allegations, threatening to go to the press and ruin Paula Deen's reputation," the firm's statement said.
After she allegedly demanded a large cash payout, "we refused to bow to that kind of pressure and refused to pay money to address false claims."
Jackson's lawsuit seeks unspecified damages.