A busy day for Google on the legal front continues with news that the company has agreed to $8.5 million in payments to settle a federal lawsuit surrounding Google Buzz and privacy.

According to AFP, court documents filed today show that seven plaintiffs will get no more than $2,500 each, lawyers that filed the case get 30% of the settlement money to cover their fees, and the remainder will be put in a fund for organizations that are focused on Internet privacy issues and education. The settlement also “requires that Google undertake wider public education about the privacy aspects of Buzz,” according to Reuters.

The case represents several similar lawsuits that were consolidated earlier this summer. The plaintiffs, in general, contended that Google violated their privacy when it launched Buzz in February and created a social network out of Gmail users’ personal contacts.

Public backlash was almost immediate: Google apologized, while government agencies reviewed Buzz and an FTC commissioner said the Buzz launch was a case of “irresponsible conduct” by Google.

The proposed settlement still needs to be approved by a federal judge in San Francisco.

There’s more discussion on Techmeme.