If I received a settlement payout $1000 and was issued a 1099 NEC, how is this filed? I was one employee of many in this settlement.

Settlement income is taxable according to the type of income it represents.  Back wages or lost wages are taxed as if they were wages and are subject to social security and Medicare Tax. If the settlement payments to the employees were for wages, this would be entered as self-employment income so the social security and medicare taxes are paid. 

If your return does not include a Schedule C, then TurboTax is trying to get you to fix, this issue.

Any income reported on Form 1099-NEC is not reportable directly on your tax return. Since this type of income is considered self-employment (non-employee compensation) it must be linked to a Schedule C, even if there are no expenses being claimed. 

To add a Schedule C so your 1099-NEC can be linked:

1. Open or continue your return in TurboTax
2. In the Search box type schedule c and click the Jump to link in the search results.
3. Answer Yes to Did you have any self-employment income or expenses?
4. Follow the onscreen instructions.

The information required for the Schedule C will include the type of business, the business name (or your name if there is no specific business name), the business address (or your address), etc.