The settlement involves arrests made on Jan. 1, 2012, as a group marched through the East Village. Protesters said police ordered them to disperse, kept them from following directions, and then arrested them for blocking the sidewalk.
"In this case and many others we have seen that the police do not understand the rights afforded individuals under the Constitution, especially with respect to expressive speech activity," said Wylie Stecklow, the lead lawyer for the plaintiffs. "Our hope is that this is the starting point for police retraining."
Occupy Wall Street began in September 2011 and was centered in Zuccotti Park in Lower Manhattan. It spawned a worldwide movement.
Last year, the city paid $230,000 for damage to Occupy Wall Street's library and $75,000 for damaging computer equipment belonging to a related group, Global Revolution.
The New Year's Day arrests followed a raucous evening in Zuccotti Park. About 200 people, accompanied by a large group of police officers, marched to the East Village a mile or two to the north.
Twelve plaintiffs are to get $20,000 each, while two people who agreed to settle earlier will get only $5,000. Another $333,000 will be allocated to legal expenses.
Several other lawsuits are pending, including one over 700 arrests during a march on the Brooklyn Bridge on Oct. 1, 2011.