Make her take you to court, because it would appear that her sister the attorney doesn't know much about law here. Generalized harassment and "hostile work environment" require a very specific showing. She would have to prove more than just that she felt harassment. Even if that were true, that's not enough. She also have to prove that the underlying reason for the harassment was her race, religion, gender, age, disability or recent FMLA use. Again, the Supreme Court of the United State specifically held that our employment laws are not meant to be a civility code. Unless she alleges and can prove (because it is her burden) that the actual basis for the alleged harassment here was one of those factors (race, religion, etc.) and NOT the reason you've given (which is a legitimate and non-discriminatory reason), she can't win.
Furthermore, she can't go directly to court. She has to go through the EEOC or New York Human Rights Commission, who will do their own investigation, can do mediation and will provide their opinion on the strength of the case (and they may very well tell her that she doesn't have one).
I believe that this is a nuisance settlement attempt, to just see if you'll shake in your boots because an attorney is calling you. Make her do it right. Make her file the EEOC complaint and go there. If it settle anywhere, do it there, because it will be in a controlled environment, but I don't see you needing to settle this. Once you call her bluff, if she actually knows this area of law, she'll back down.