Is the settlement payment my employer paid me considered taxable income in the case where we settled my sexual harassment claim against my employer?

Yes, punitive damages and awards or settlements for Emotional Distress or mental anguish not related to a physical injury or physical sickness must be included in your income on line 21 of Form 1040. 

To enter your settlement payment in TurboTax take the following steps:

1. Click on Federal Taxes
2. Wages & Income or Income & Expenses
3. Scroll down to Less Common Income and click Show More
4. Click Start next to Miscellaneous Income, 1099-A, 1099-C, etc
5. Scroll to the bottom and click Start next to Other Reportable Income
6. Click Yes when it asks if you have "Any Other Taxable Income"
7. Follow the interview questions to enter your settlement payment received. 

For more information on Taxable settlements click on the following link

https://www.irs.gov/pub/irs-pdf/p4345.pdf