The lawsuit, which sets out her allegations in graphic detail, says Mr Giuliani began to abuse her almost immediately after she was hired.
It says the former New York City mayor coerced Ms Dunphy into giving him oral sex "against her will" in his flat.
It also claims Mr Giuliani "often demanded that she work naked, in a bikini, or in short shorts with an American flag on them that he bought for her" and would visibly touch himself while on video conference calls.
According to the lawsuit, Ms Dunphy made recordings of conversations with Mr Giuliani which included sexual comments and demands for sex as well as racist, sexist and antisemitic remarks.
Ms Dunphy is also suing for wage theft, claiming Mr Giuliani refused to pay her a promised $1m salary for the role as it would need to be deferred while his divorce was completed.
A spokesperson for Mr Giuliani said he "vehemently and completely denies the allegations", describing the claims as "pure harassment and an attempt at extortion".