Being falsely accused of wrongdoing at work can have a substantial negative impact on your mental health. Not only the shock and hurt that someone would lie about you, but also the stress of trying to prove your innocence. The damage to your reputation can also cause feelings of isolation and depression. The accusation may even carry a risk of criminal charges which can compound the psychological toll of the situation. Even if things are cleared up and everything goes back to normal, there could be lasting anxiety about it happening again. Emotional distress is just one way that false statements can cause real damage.