McQueary testified at trial that he walked in on Sandusky molesting a boy in a locker room shower in 2002 and later reported what he had seen to top administrators.
Two of those men, suspended Athletic Director Tim Curley and former university vice president Gary Schultz, also face charges of failing to report the incident to authorities and later lying about it to a grand jury.
In his suit, McQueary said his treatment by the university had caused him "much distress, anxiety and embarrassment" since Sandusky's arrest in November. His complaints include a statement former university president Graham B. Spanier released hours after the arrests pledging full support of Curley and Schultz.
Those statements, McQueary's lawsuit alleges, "reinforced the perception that (McQueary) lied and committed perjury."
McQueary was placed on administrative leave Nov. 13 and was the only assistant coach on staff under former head coach Joe Paterno who was not interviewed for a position under new head coach Bill O'Brien.
The former assistant coach said he learned he had been terminated from watching a television interview with Penn State president Rodney Erickson.
At the time of his termination, his lawyers said, McQueary's salary was listed at $140,400 plus benefits such as a bonus for bowl games, a university car and a cell phone. They are seeking $4 million in damages - the equivalent of his salary had he stayed at Penn State for the rest of his 25 year career.
Sandusky, who was convicted on 45 counts of child sex abuse in June, faces a Tuesday sentencing hearing in Centre County court.
Contact staff writer Jeremy Roebuck at 267-564-5218, jroebuck@phillynews.com, or @jeremyrroebuck on Twitter.
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