The report claims an investigation by the WWE board of directors uncovered a secret $US3 million ($AUD4.2 million) settlement that Mr McMahon paid the woman to keep the affair a secret.
'DISGUSTING': Justis Huni opponent's shock act leaves fight fans livid
The employee in question was reportedly hired as a paralegal in 2019 and eventually left after signing a separation agreement in January which barred her from discussing the relationship.
The board's investigation reportedly began in April and has unearthed other nondisclosure agreements involving claims by former female WWE employees of alleged misconduct by McMahon and WWE executive John Larinaitis.
It's understood the payments totalled in the millions of dollars.
Preliminary findings from the board suggest that Mr McMahon used personal funds to pay the former female employees.
While Mr McMahon is chairman of the board and has three other allies at the table, the investigation is being led by independent director Man Jit Singh.
He and and the other eight independent directors have reportedly retained law firm Simpson Thacher & Bartlett LLP to conduct the investigation.
Board learned of alleged affair, repayments from anonymous email
The board reportedly learned of the $4.2 million million agreement via a series of anonymous emails received from a person who said the paralegal was a friend.
As the emails laid out, the woman left after encounters with both McMahon and Laurinaitis.
Vince McMahon investigated over alleged affair
"The first email, sent to board members on March 30, alleged that Mr. McMahon, 76 years old, initially hired the woman at a salary of $100,000 but increased it to $200,000 after beginning a sexual relationship with her," the Wall Street Journal report states.
"The email to the board also alleged that Mr. McMahon 'gave her like a toy' to Mr. Laurinaitis. The board is investigating the allegations in the email, the people familiar with the inquiry said."
“My friend was so scared so she quit after Vince McMahon and lawyer Jerry paid her millions of dollars to shut up,” the person who sent the initial email reportedly wrote.
A WWE spokesperson reportedly told the Journal the company is fully cooperating with the investigation and McMahon's relationship with the paralegal was consensual.
Jerry McDevitt, who works as Mr McMahon's attorney, said the paralegal had made no claims of harassment against his client and that the “WWE did not pay any monies” to the ex-employee “on her departure”.
McMahon, who has helmed the WWE since 1982, is married to Linda McMahon, who was the company's CEO before pursuing a US Senate seat and later becoming the head of the Small Business Administration under former President Donald Trump.
with Yahoo Sports US
Click here to sign up to our newsletter for all the latest and breaking stories from Australia and around the world.