UC and plaintiffs represented by the American Civil Liberties Union filed the preliminary settlement in federal court in Sacramento on Wednesday. The agreement is subject to the approval of a federal judge.
Under the proposal, UC will pay out $30,000 to each of 21 plaintiffs named in the complaint and an additional $250,000 for their attorneys to split.
The settlement also calls for the UC to set aside $100,000 to pay other individuals who can prove they were arrested or pepper-sprayed during the Nov. 18, 2011, incident.
The chemical crackdown prompted campus protests and calls for the resignation of Chancellor Linda Katehi after online videos shot by witnesses went viral.
Images of an officer casually spraying orange pepper-spray in the faces of nonviolent protesters became a rallying point for the Occupy Wall Street movement.
A task force report released in April blamed the incident on poor communication and planning throughout the campus chain of command, from the chancellor to the pepper-spraying officers.