Norwalk Employees Settle Sexual Harassment Case : Lawsuits: Two women will divide $225,000. They had accused their former boss, Councilman Jesse Luera. He denies their allegations.

The city of Norwalk has agreed to pay $225,000 to two city employees who claim they were sexually harassed by their boss, a veteran department head who was fired but then won a City Council seat.

Councilman Jesse M. Luera was fired as director of social services in 1992 after city social workers Peggy Jones Flores and Velia Vargas complained that Luera repeatedly made sexual advances, including grabbing their breasts or buttocks and offering to pay for sexual favors.

Luera, who has consistently denied the allegations, was dismissed by former City Manager Richard Powers in May, 1993, a decision that was upheld by the city’s personnel board. Although the harassment claims dogged him throughout the campaign, Luera was elected to the council in April. The city manager resigned under pressure a month later.

Flores and Vargas, who filed the lawsuits against Luera and the city nearly a year ago, will split the settlement evenly. The city also agreed to pay the employees’ health insurance for six months. Both women agreed to resign and not to seek new jobs with the city, according to the settlement.

The suit accused the city of failing to discipline Luera after several complaints were filed with the city manager from 1990 to 1992, and for tolerating a hostile environment for female employees.

Neither Luera nor his attorney, Augustin R. Jiminez, was available to comment on the agreement. Before his City Council victory, Luera had been president of the Norwalk-La Mirada Unified School District board. He owns a dry-cleaning business in Norwalk.

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Neither woman was happy about giving up her job as part of the settlement, according to their attorney, Samuel Paz. But they felt uncomfortable at work after Luera’s council victory, and “felt continual pressure from his supporters” to leave, Paz said.

“Had Luera not won the election, they would have both wanted to stay on at City Hall. Hopefully, the compensation will be enough for them to move on and give them time to find new jobs,” Paz said.

Another harassment lawsuit against Luera, filed in the midst of April’s City Council race, is pending.

In that lawsuit, Luera is accused of making improper sexual advances toward the city’s child development program director, Rachel Pedraza, over a five-year period.

Pedraza, who claims in her lawsuit that she has suffered “severe emotional and mental stress,” has been on medical disability leave since last fall.

Luera has denied these accusations.

The city councilman faced similar allegations in 1983, when he was placed on 30-day paid administrative leave after a city employee alleged that he made suggestive comments and was verbally abusive. An independent investigator found the allegations to be unsubstantiated.