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WASHINGTON —  In a closely watched case that could have a broad effect on hiring and promotion policies, the Supreme Court ruled Monday that white firefighters who earned top test scores were the victims of illegal discrimination when the city of New Haven, Conn., tossed out the results and denied them promotions.

The 5-4 decision sent a warning to employers -- private as well as public -- that they could not use their good intentions and concerns about racial diversity as reasons for discriminating against white employees.

Justice Anthony M. Kennedy said the goal of a racially diverse workforce did not justify “a de facto quota system.”

The case had been eagerly anticipated not only for its legal significance but for its potential effect on the confirmation hearings of Supreme Court nominee Sonia Sotomayor, who along with two other judges on the U.S. 2nd Circuit Court of Appeals had rejected the claims of the white firefighters.

By overturning that decision, the Supreme Court gave new fuel to conservative critics who have questioned Sotomayor’s fairness. But her supporters said the close decision showed she was no legal radical.

Civil rights lawyers called Monday’s decision a setback, but they were not sure how great.

“There’s a lot we don’t know. This seems to leave employers caught between a rock and a hard place,” said John Payton, president of the NAACP Legal Defense Fund.

He said employers clearly could not follow the example of New Haven and cancel a test based on the results. But employers can do more to make sure tests are fair.

“This requires more effort on the front end, making sure in advance that a test is not going to have this disparate impact,” Payton said.

Since the 1970s, the court has said employers should not use hiring or promotion tests that would disqualify a disproportionally high number of minority candidates. But the court Monday pulled back from that approach and said employers could not discriminate against white job seekers to avoid a disparate impact on minorities.

“No individual should face workplace discrimination based on race,” Kennedy said. Once an employer has given a test that is fair and geared to the job, it is not entitled to disregard it “based solely on the racial disparity in the results,” he added.

The high court’s ruling is a clear win for the white firefighters. Though the court stopped short of ruling on constitutional grounds, it said the city violated the firefighters’ rights under the 1964 Civil Rights Act and that they were entitled to be promoted.

The decision highlighted the final day of the court’s term -- and the last day for retiring Justice David H. Souter. He agreed with the liberal dissenters who said the city of New Haven was justified in setting aside a test that would have kept any blacks from being promoted.

In a poignant moment in the courtroom, Chief Justice John G. Roberts Jr. said he and his colleagues were sad to see Souter retire after nearly 20 years on the court, but added he understood his wish to “trade white marble for White Mountains,” a reference to Souter’s native New Hampshire. Souter said he was “touched more than I can say” by the kind send-off from his eight colleagues.

For decades, the court has been closely split over whether race can or should play a role in who gets hired or promoted. In the Civil Rights Act, Congress said employers could not discriminate against anyone because of race, gender or ethnicity.

In the 1970s, however, the court said employers sometimes could give an edge to minorities to make up for a history of discrimination.

Since then, the conflict has played out in many cities in long-running legal battles involving fire and police departments.

“Municipal lawyers often say that every time a new test is adopted, it generates not just one lawsuit but two,” said Andrew Pincus, a Washington lawyer who backed New Haven in the firefighters case.

On the one side, blacks and Latinos have sued, claiming that the tests discriminated against them. On the other side, lawyers for whites have sued when city officials failed to strictly follow test results in awarding jobs.

When New Haven backed away from using the results from its 2003 promotion test, firefighter Frank Ricci and 19 others sued Mayor John DeStefano for racial discrimination.

Kennedy said New Haven’s officials were wrong to rely “on raw racial statistics” as their reason for setting aside the test. In all, 118 firefighters took the exam hoping for one of 15 promotions to lieutenant or captain.

Kennedy said the test was valid and geared to the skills and knowledge needed by firefighters. “The process was open and fair,” he said. City officials had no “strong basis” for thinking the test was flawed and unfair and, therefore, had no legal basis for setting aside the results, he said.

Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. agreed.

Because the ruling interpreted Title VII of the Civil Rights Act, it applies to all employers, private as well as public.

Civil rights lawyers criticized the decision but said it could force needed changes in tests.

“It might mean less use of these multiple-choice tests,” Payton said. “Who would think the best way to choose a lieutenant with leadership ability is to give a multiple-choice test?”

But a former Reagan administration lawyer praised the court for insisting on equal treatment without regard to race. “The practical impact of the decision will push employers toward a colorblind policy,” said Roger Clegg, president of the Center for Equal Opportunity. “That’s a good thing in a country that is increasingly multiracial and multiethnic. We can’t have a legal regime that says people are protected differently based on their racial or ethnic group.”

In reading her dissent, Justice Ruth Bader Ginsburg appeared to tweak her conservative colleagues by citing a word used by President Obama.

“Mr. Ricci and his fellow petitioners understandably attract the court’s empathy,” she began. Senate Republicans have repeatedly criticized Obama for saying he wants judges who can show empathy for those who are vulnerable.

In her written dissent, Ginsburg used the word “sympathy” rather than “empathy.”

She went on to fault the court’s majority for ignoring the history of discrimination against blacks and Latinos in the New Haven Fire Department. In the early 1970s, minorities made up nearly half of the city’s population, she said, yet just one of 107 firefighters was black.

Besides Souter, Justices John Paul Stevens and Stephen G. Breyer joined her dissent.

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david.savage@latimes.com