Daniels, whose real name is Stephanie Clifford, sued the Columbus Police Department after she was arrested in July 2018 at the Siren’s Gentleman’s Club on charges of inappropriate touching.
Police quickly dropped the charges and made changes to their arrest policies, which is why Daniels' attorney says she agreed to the settlement, NBC News reported.
"That's the only reason she agreed to settle the case for what she did," her attorney, Chase Mallory, told NBC News. "Her main goal was to make sure people weren't going to be treated like she was going forward."
Daniels sued the Police Department alleging that her arrest was really an effort to protect President Donald Trump, with whom Daniels claims to have had an affair a decade ago.
The Columbus City Council still has to approve the settlement.