I cannot speak for all airlines but I do believe that they do work the same way. If an employee is being re-positioned or must take that flight due to an assignment (not just that they didn't plan well and have to get home from vacation) then they wil be seted, even if it means bumbing a paying passenger (for copenston, of coursee).
But if the employee is just enjoying their free flying privileges', they will never bump paying passenger, even if that passenger agrees to it. Lets say there are ten paying passengers on the standby list and there is a no show. The next paying passenger on the list gets that seat.
Now, lets say, the employee has a sympathetic story and convinces the next standby passenger to give up their seat, the computer will allocate it to the next paying passenger, not the employee.
Maybe, the employee was being moved by the airline and actually was entitled to that seat. That does not excuse her embarrassing the airline but that may explain how she got on the plane.