American Apparel said on Wednesday it would "vigorously dispute" the claims.

The lawsuit, filed on Tuesday in California Superior Court, seeks a minimum of $20 million in damages.

The lawsuit is one of several from Charney, who was suspended as CEO last June and dismissed six months later.

Charney also filed a $30 million defamation lawsuit last week against Standard General LP, one of American Apparel's biggest investors.

(Reporting by Ramkumar Iyer in Bengaluru; Editing by Kirti Pandey)