New York (CNN) -- New York City agreed in a settlement Tuesday to pay $98 million in back pay and benefits to entry-level firefighters who claim the New York Fire Department used a biased entrance exam that kept African-American and Latinos off the job.
The Justice Department sued the city in May 2007, alleging the exams — first administered in 1999 — both discriminated against minority candidates and didn't properly determine who was qualified for the positions.
A U.S. district judge ordered the city to pay $128 million and to hire 293 black and Latino applicants, provided they pass all of the tests in the hiring process.
The first groups of these candidates joined the fire department in July 2013 and January, with an additional group expected to join in July.
The financial issue had remained a sticking point. However, current Mayor Bill de Blasio's administration did not seem to have former Mayor Michael Bloomberg's desire to continue fighting the suit.
"This administration is fully committed to promoting diversity and equal access in every sector across our five boroughs, and this settlement will move New York City one step closer to this goal," de Blasio said in a written statement.
Among the steps the city says it will take to increase minority hiring will be the creation of a chief diversity and inclusion officer position within the fire department.
Paul Washington, who was president of the Vulcan Society, which represents black firefighters, when the suit was filed, said Tuesday, "Hopefully, after almost 150 years of blacks being excluded from the best uniformed job in the city, we are witnessing a turning point."
As part of United States of America and Vulcan Society Inc. vs. City of New York, a group of black firefighters alleged the city had intentionally discriminated against them, violating Title VII, the U.S. Constitution and state law.
The lawsuit alleged that the exams had little to do with firefighting and instead focused on cognitive and reading skills. Because of the hereditary nature of the fire department, white candidates were recruited and supported throughout the application process by family or neighborhood contacts, and whites consistently passed while minority candidates failed.
"There has been one persistent stain on the Fire Department's record," the lawsuit said. "For decades, black and other minority firefighters have been severely underrepresented in the Department's ranks.
"This pattern of underrepresentation has remained essentially unchanged since at least the 1960s. While the city's other uniformed services have made rapid progress integrating black members into their ranks, the Fire Department has stagnated and at times retrogressed."
The lack of minorities in U.S. fire departments has been the focus of many lawsuits around the nation. However, some big cities have diversified their ranks much faster. More than half of the Philadelphia and Los Angeles fire department members are black or Latino.
The settlement still needs to be approved by the district court.
"We look forward to a new era in which African-American and Hispanic firefighters are full and equal participants in the FDNY's proud tradition of protecting and serving the people of the city of New York," said Loretta Lynch, U.S. Attorney for the Eastern District of New York.
CNN's Rose Arce contributed to this report.