Although the City Council agreed to settle, the deal must still be approved by a U.S. District Court judge before it's finalized, said Frank Mateljan, a spokesman for the city attorney's office.
Cheryl Aichele and five other demonstrators filed a lawsuit in December 2012, alleging the police department used a "shock and awe" campaign to forcibly remove hundreds of protesters from a campsite on the south side of City Hall.
Attorneys representing the protesters did not immediately return calls seeking comment.
But in court documents, protesters allege that the military tactics resulted in nearly 300 arrests in November 2011 and violated their "First, Fourth and Fourteenth Amendment rights to assembly, association, freedom from unlawful seizure and liberty."
The protesters claimed their handcuffs were tight and they were refused basic rights, including access to water or bathroom facilities. They alleged they were told to urinate and defecate on themselves, according to the lawsuit.
At the time, demonstrators from the local branch of the national Occupy movement maintained their eight-week encampment 24 hours a day, seven days a week to protest economic inequality and bank bailouts, according to the lawsuit.
In October 2011, the City Council passed a resolution supporting the Occupy protest.
But Aichele and the other protesters said the city's support suddenly waned.
And after 59 days, LAPD Chief Charlie Beck and then-Mayor
"There was no process by which this decision was made other than executive fiat," the lawsuit claims.
Signs were posted notifying the group that the City Hall lawn would be closed at night because it fell under the regulations of the city's parks department.
But the encampment remained and protesters alleged the city was violating the law by forcing the group to move, according to the lawsuit.
On the night of Nov. 30, 2011, officers in riot gear removed the protesters from the campsite and nearby sidewalks after declaring the gathering an unlawful assembly.