By Elizabeth Daley

PITTSBURGH (Reuters) - The Pittsburgh Police Department has agreed to revamp its hiring practices in order to settle a federal lawsuit that claimed discrimination against African-American job applicants, Mayor Bill Peduto said on Thursday.

The settlement of the class-action lawsuit also calls for the city to pay $985,000 in total to black applicants who were shut out of jobs open on the force between 2008 and 2014.

The city also will pay legal fees of up to $600,000, said the city's lawyer Lourdes Sanchez-Ridge, who spoke to reporters at a press conference with the mayor and the American Civil Liberties Union of Pennsylvania, which filed the legal action.

In a city that is 66 percent white, according to the 2010 Census, the police force is currently 85 percent white, according to City Hall.

About 19.5 percent of applicants who took recent Pittsburgh officer exams were African-American, but only 4 percent of new hires since 2001 have been black, said ACLU legal director Witold Walczak. Census figures show 26 percent of Pittsburgh residents are black.

To remedy the situation, the department has agreed to work with outside experts to examine and revamp its hiring practices within 24 months, the mayor's office said.

"We want to hire officers that reflect the diversity of the city of Pittsburgh," Peduto said. "If you see the issues that are flaring up in city after city, you realize ... that it can't be solved after the fact."

The settlement comes at a time of widespread concern over shootings by white police officers in confrontations with black suspects after such incidents in Missouri and North Carolina sparked a series of protests nationwide.

Pittsburgh police in the past were more likely to hire white officers who had criminal records with minor offenses than to hire African-Americans with the same background or even a cleaner record, Walczak said.

The lawsuit was filed on behalf of five black applicants who were denied jobs with the Pittsburgh force. Four of them have subsequently been hired to area police forces, including one newly hired by the Pittsburgh Police Department.

Sanchez-Ridge encouraged black candidates to apply to the next police academy class by May 11.

"We welcome you," the city lawyer said.

(Editing by Barbara Goldberg and Eric Walsh)