Todd Bosnich made the accusations in an interview with radio host Mike Slater that never aired, but was obtained by Politico, the outlet reported Wednesday.
DeMaio, who is challenging Rep. Scott Peters (D) in California's 52nd Congressional District, responded on Wednesday, calling the accusation "absolutely untrue" and a "an outrageous lie." The candidate noted that his accuser was identified as a "prime suspect" in a break-in at the DeMaio campaign office.
In the Friday CNN interview, DeMaio again mentioned the break-in and denied the allegations of sexual harassment.
"It's unfortunate. He's clearly troubled. He got caught for the damage that he did to the campaign and now he's manufacturing, in essence, a cover story to explain away his actions," DeMaio said. "It's unfortunate. It's untrue. And my hope is that the police department will hold him accountable for his actions against our campaign."
CNN reports on Bosnich's accusations:
Todd Bosnich says he joined DeMaio's campaign last year eager to work for a candidate who shared his values and who, like himself, is an openly gay Republican.
But Bosnich said his enthusiasm for his boss was soon replaced by dread, because DeMaio would find him alone and make inappropriate advances, massaging and kissing his neck and groping him.
One morning last April, Bosnich said he arrived early at campaign headquarters and DeMaio called him back to his office.
"I came over to his office, door was open. And he was masturbating," Bosnich said. "I saw his hand, his penis in his hand and he had a smile on his face. And as soon as I came over he was looking at me."
DeMaio has faced similar problems in the past -- last year, he was accused of masturbating in San Diego City Hall bathroom facilities in 2009. He later passed a polygraph test while being questioned about the accusation, which he called a "vicious rumor."
House Speaker John Boehner has pledged to support DeMaio, and is scheduled to hold a fundraiser for the openly gay Republican in California on Saturday.
Read more at CNN.