Montville - The town has agreed to pay $135,000 to the Water Pollution Control Authority assistant supervisor who sued Montville after being fired in June 2012. The payment is one of the terms of a settlement agreement reached by the town and the employee in February.

The employee, Tom McNally, is chairman of the Republic Town Committee and alleged that he was fired for political reasons. McNally's complaint, which was filed by his attorney Jacques Parenteau, claimed that Mayor Ronald McDaniel and four WPCA employees conspired to force McNally out of his position.

McDaniel is a Democrat and two of the WPCA employees named - Timothy May and Brian Lynch - are registered Democrats and were fund-raising supporters of the mayor, according to the complaint.

The town hired the law firm Suisman, Shapiro, Wool, Brennan, Gray and Greenberg to investigate McNally's role in two workplace accidents that occurred in December 2011. That report concluded that McNally was "incapable of consistently performing the essential functions of the position in a satisfactory manner" and recommended that he be fired.

Of the sum awarded to McNally, $100,000 is meant to serve as a severance fee, while the remaining $35,000 is to cover his attorney's fees.

The settlement agreement also prohibits McNally from seeking employment with Montville or the Montville Board of Education until 2018. The limitation does not apply to elected or appointed positions.

McNally is also allowed to say that he resigned from the WPCA rather than that his employment was terminated, and McDaniel agreed to provide a neutral letter of reference detailing McNally's employment and duties with the town.

The settlement also requires that the report by Suisman and Shapiro about the WPCA accidents must remain a draft and notes that the report is subject to attorney-client privilege. The town and McNally agreed not to disclose the report unless ordered to do so by a higher authority.

In June, the Freedom of Information Commission found that the report was not subject to attorney-client privilege and was not a preliminary draft. The commission ordered the town to provide the report to The Day.

Montville and the WPCA did not have to contest FOI proceedings for the report and could ask McNally to do so at his own expense, according to the agreement. The town decided to contest The Day's request for the document, however, and Town Attorney Eileen Duggan represented the town at a commission hearing in April.

The settlement contained a confidentiality agreement requiring the town employees and McNally to limit their comments on the dispute to the phrase "the lawsuit has been resolved to the satisfaction of all parties." It allowed, however, for McNally to strongly deny the claims in the report if it became public.

Parenteau and McDaniel could not be reached for comment on Wednesday.

k.catalfamo@theday.com