John Haleas was stripped of his police powers after being accused of falsifying drunk driving arrests, the Chicago Sun-Times reported Tuesday.
He subsequently pleaded guilty to misdemeanor obstruction of justice charges but the police board permitted him to be reassigned to an office job in the records division.
On Monday, the City Council's Finance Committee approved a $325,000 settlement to compensate a hemophiliac who suffered a possible skull fracture after a May 2009 beating administered by Haleas.
Julio Martinez was falsely arrested for DUI and in a holding room at the time of the assault.
Alderman Willie Cochran said he doesn't think it's appropriate that Haleas receive taxpayer funds.
Alderman Scott Waguespack joined Cochran in questioning Haleas' employment.
"The exposure that we're seeing from people like Mr. Haleas -- it's just compounded more and more when a decision is not made" to fire him, said Waguespack.