Chauvin is charged with murder in the death of George Floyd during an arrest last may in Minneapolis. Floyd's death spurred protests across the world.
The federal lawsuit was filed in the U.S. District Court for the District of Minnesota on July 15, 2020, by Kaarin Nelson Shaffer, the named trustee for the family.
A makeshift memorial in Minneapolis, Minn., honors George Floyd as jury selection begins in the trial of former Minneapolis Police officer Derek Chauvin.
Floyd family attorney Ben Crump called it the largest pretrial settlement ever for a civil rights claim, and thanked city leaders for "showing you care about George Floyd".
Speaking at a press conference on the settlement Friday afternoon, Crump said he was following jury selection in Chauvin's trial and hoped to see jurors seated "that will respect George Floyd and not devalue him because he was a Black man".
Judge Peter Cahill's decision comes after the Minnesota Court of Appeals ruled on Friday that he must reconsider a third-degree murder charge against 44-year-old Chauvin, whose trial got underway with jury selection this week in Minneapolis.
Philonise Floyd says his late brother George is "here with me in my heart".
According to Minnesota law, the maximum sentence for second-degree murder is 40 years, and 25 years for third-degree murder.
Lawyers for Chauvin had successfully argued a year ago that Cahill should dismiss third-degree murder on the basis that the statute requires the "death-causing act" not be directed at a single individual.
Cahill told potential jurors after the ruling that he still expects opening statements on March 29.
Chauvin and three other officers were fired.
The man, who told attorneys he could set that aside and consider the evidence in the case, was the only juror chosen Thursday in a day most notable for the judge restoring a third-degree murder charge against Chauvin.
Prospective jurors were mailed a 16-page questionnaire about the case, asking them about their views on policing, the criminal justice system and advocacy movements such as Black Lives Matter.
Chauvin was one of the officers involved in arresting Floyd on suspicion of using a counterfeit $20 bill to buy cigarettes.
Dozens of witnesses are expected to testify in the case, although it is not clear whether Chauvin, a 19-year veteran of the Minneapolis Police Department before he was sacked after the May 25 incident, will take the witness stand in his defense.
The other three former officers - J. Alexander Kueng, Thomas Lane, and Tou Thao - are scheduled to go on trial on August 23.