California taxpayers will pay $350,000 to settle a lawsuit filed by a former state employee who alleged that Treasurer Fiona Ma, who is now running for lieutenant governor, sexually harassed her.

The former employee, Judith Blackwell, worked under Ma as the executive director of the California Tax Credit Allocation Committee. Blackwell filed the lawsuit in 2021 in Sacramento County Superior Court after she was fired.

The complaint alleged that Ma offered to let Blackwell stay in hotel rooms, and later at an Airbnb, in Sacramento with Ma and her chief of staff to avoid an hourlong commute home after dark. The lawsuit said that Ma repeatedly exposed her “bare rear end” to Blackwell in the hotel room, and once crawled into Blackwell’s bed at the Airbnb while she was sleeping.

A Sacramento County judge last year dismissed Blackwell’s claims of wrongful termination and racial discrimination, but allowed the sexual harassment allegations to move forward. The case was scheduled to go to trial Sept. 9.

“From day one, I said this was a frivolous lawsuit filed by a disgruntled employee who fabricated claims in an attempt to embarrass me in hopes of receiving millions of dollars in a settlement,” Ma said in a statement Friday. “After three years of delay, I have been completely vindicated, and can continue my work on affordable housing, climate action and job creation without distraction.”

Waukeen McCoy, the San Francisco attorney who represented Blackwell, said Ma’s characterization of the case as a vindication was “nonsense.”

“I cannot fathom how she thinks that she’s been vindicated — my client has been vindicated,” McCoy said. “It seems like Ms. Ma does not feel like she did anything wrong. She’s not taking responsibility for her actions, which is unfortunate.”

The $350,000 settlement agreement was signed by attorneys for the state Justice Department and for the state Treasury, both dated Friday.

Ma was elected as the state’s banker in 2018, and previously served in the California Assembly, where she authored legislation banning toxic chemicals and strengthening protections for domestic violence victims.

Ma is a certified public accountant and has also worked as a member of the California Board of Equalization and the San Francisco Board of Supervisors.