Cher said she was happy with the jury's verdict
A jury at Los Angeles Superior Court found in favour of Cher against a former employee who the singer's lawyers characterised as "emotionally ill".
Cher was cleared of charges of wrongful termination, retaliation, sexual harassment, defamation and unpaid wages, brought by Salvatore Sampino.
"I'm really happy with the verdict," the 55-year-old entertainer said outside court as she signed autographs for the jury.
'Hostility'
Mr Sampino was hired to supervise a $17.1m (£11.75m) renovation of Cher's Malibu estate.
He alleged that the singer broke tax and labour laws, used illegal immigrants to avoid tax and did not pay overtime.
His lawyer, William Bloch, said during the prosecution that when Mr Sampino made his concerns known, he was met with "hostility" from his employers.
The payroll supervisor claimed that when Cher ignored his concerns it was "tantamount to being fired".
Cher's attorney said she had been in Europe promoting an album while Mr Sampino was working on her home.
Cher's attorney Jerry Mandel, contended that Mr Sampino was never her employee, but that of a subcontractor, Artemis Design and Consulting, and as such his resignation was nothing to do with the star.
After the case ended, Mr Sampino, 40, complained the jurors, who deliberated for one day, did not consider all the facts.
Cher was born Cherilyn Sarkisian in California in 1946.
She left school at 16 to become an actress in Los Angeles but gave this up when she met producer and songwriter Sony Bono in 1963.
The pair hit gold with the song I Got You Babe and went on to be fixtures on the 1960s music scene.
The couple eventually split in 1974 and Cher launched a successful solo singing and acting career.
By the 1980s she was best known as an actress, starring in films like Moonstruck, The Witches of Eastwick and Mermaids.
Her singing career was given a boost in the late 1990s when her song Believe was a major international hit.