LYNNWOOD — She was, arguably, the employee who knew Mayor Don Gough best.

As his executive assistant, Stephanie Simpson was the one responsible for managing his daily schedule and was his liaison to the mayor’s office, other city departments and political and business leaders.

Simpson said that behind the scenes, tensions between herself and Gough percolated.

That friction increased last year when she became pregnant and applied for a job as assistant city administrator, Simpson said. The conflict escalated when she returned in mid-January, she said.

This February, Simpson accused Gough of discrimination, leading to a personnel investigation and a settlement between her and the city. As part of the deal, Simpson received $49,500 and three months of benefits. In exchange, Simpson, who has been working at home since mid-March, agreed not to sue the city or Gough.

Gough and other city officials declined to comment for this story because the investigation is ongoing.

City Attorney Eric Frimodt said this week he expects the city’s investigation into Simpson’s accusations to be completed by May 21.

The settlement never went before the City Council. City regulations allow the mayor to sign severance agreements without council approval as long as they’re under $50,000.

This week, the City Council agreed to hire an outside lawyer to advise it on the investigation.

Simpson’s last day of work will be June 1. In an interview, Simpson, who worked as Gough’s executive assistant since September 2006 and was paid an annual salary of $60,000, said the two months leading up to that severance agreement were among the most difficult for her.

E-mail exchanges between Simpson’s attorney, Alex Higgins, and city lawyers, obtained through a public documents request, show that the city balked at Simpson’s request to be placed on administrative leave during the investigation.

Simpson never filed a formal complaint. In a Feb. 18 e-mail to city attorneys, her lawyer wrote, “She is very afraid that she will experience additional retaliation and discrimination as a result of her reporting the unlawful treatment. Therefore, we suggest the City place her on a paid administrative leave during the pendency of the investigation.”

Four days later, assistant city attorney Katherine Weber replied to her attorney via e-mail that the city didn’t see a reason to grant Simpson administrative leave, which is special time off given to employees who aren’t eligible for overtime pay.

“The City believes that Ms. Simpson may effectively perform her duties during the pendency of the investigation, and that it is not necessary to separate her from the workplace,” Weber wrote.

The investigation has occurred during a turbulent period at City Hall.

In March, John Moir, Lynnwood’s finance director, resigned following heated council budget discussions over a projected worst-case $5 million budget gap. The council and Gough have had an uneasy relationship since 2006, marred by council accusations that he’s withheld requested information.