Google's John Mueller said this morning in a webmaster hangout at the 20:55 mark that Google Image search does not index and rank images from CSS background code. He said if you want your images to rank in Google Image search then you best use normal image tag with the source attribute pointing at the image.

So do not use this:

Instead use this:

Here is what John said:

Which image placement is better using the image tag or using CSS kind of background image? So from our point of view for image search we would use the image tag with the source attribute pointing at the image. And as far as I know we don't use CSS images at all for image search. So for normal web search it doesn't matter, you can use whatever works best for you. If you want to have these images indexed in image search then I would definitely use a normal image tag for that.

Here is the video embed:

Forum discussion at YouTube.