What Is an Applicant Tracking System? A Guide for Employers

An applicant tracking system (ATS) is recruiting software that stores job openings and applicant records and moves each candidate through defined hiring stages, from requisition and application through screening, interviews, communications and offer. Employers use an ATS to keep hiring organized, consistent and documented in one place instead of across inboxes and spreadsheets.

What Is an Applicant Tracking System?

An applicant tracking system is the system of record for hiring before someone becomes an employee. It holds each open role, every person who applies to it, where each candidate stands, who has reviewed them, what was said to them and why they moved forward or did not.

Several people typically work in the same ATS:

• Recruiters or HR generalists post jobs, review applicants and move candidates between stages.
• Hiring managers review shortlisted candidates, interview and submit feedback.
• Approvers, such as finance or leadership, sign off on new roles and offers.
• Candidates apply through a careers page or job board and receive messages from the system.

Some ATS products also include candidate relationship management (CRM) features for keeping in touch with people who have not applied yet. The core job of an ATS, though, is managing people who have applied to a specific opening.

How Does an ATS Work? The Hiring Workflow Step by Step

Most ATS products follow the same basic sequence. The labels differ by product, but the steps below map to how most small and midsize employers hire.

1. Requisitions and job postings

A requisition is the approved request to fill a role. It usually records the job title, department, hiring manager, location, pay range, headcount and who approved it. Once the requisition is approved, the ATS publishes the job to your careers page and, depending on the product, to connected job boards. Every application that follows is tied back to that requisition, which makes later reporting and recordkeeping much easier.

2. Applications and candidate stages

Each applicant gets a record, and the ATS tracks that record through a series of stages you define. A simple pipeline might look like this:

The last row matters more than it looks. Recording a consistent reason each time a candidate leaves the process (sometimes called a disposition) helps you explain decisions later and spot stages where qualified people drop out.

3. Screening

Screening tools range from simple knockout questions, such as whether the candidate holds a required license, to keyword filters and AI-based ranking. These tools can save time, but they also shape who a person ever sees. A 2026 Stanford study of one vendor’s AI screening tool, covering about 4 million applications, found racial disparities in its recommendations when postings were analyzed one at a time.

Some jurisdictions regulate automated screening directly. New York City’s Local Law 144 generally requires a bias audit and candidate notice before an employer uses an automated employment decision tool, and the city began enforcing it on July 5, 2023. Illinois amended its Human Rights Act, effective January 1, 2026, to address discriminatory effects of AI in employment decisions and to require notice when employers use it. Rules in this area are changing in several states, so check the law where you hire before turning on automated ranking or rejection features.

4. Interview coordination

An ATS usually connects to company calendars so recruiters can offer interview slots, send invitations and reschedule without long email chains. Many systems also provide interview scorecards, which ask each interviewer to rate the same job-related criteria. Scorecards keep feedback in one place and make it easier to compare candidates on the same basis.

5. Candidate communications

Templates for application confirmations, interview invitations, status updates and rejection messages help every candidate hear from you on a predictable schedule. Because messages are sent from the ATS, the candidate record keeps a history of what was said and when, which is useful if a candidate later asks about their application.

6. Offer and screening handoff

When the team selects a finalist, the ATS typically manages offer approval and the offer letter. Many employers make offers conditional on a background check. At this point the process moves partly outside the ATS, because the background check is prepared by a separate screening provider under different rules.

Where Do Background Checks Fit in an ATS Workflow?

An ATS tracks candidates. It does not compile background check reports. Those come from a consumer reporting agency, and the Fair Credit Reporting Act (FCRA) sets steps the employer must follow when it uses one. Under FTC and EEOC guidance, the employer must:

1. Disclose that it may obtain a background report, in a standalone document that is not part of the job application.
2. Get written authorization from the candidate before ordering the report.
3. Send a pre-adverse action notice before rejecting a candidate based in whole or in part on the report, including a copy of the report and A Summary of Your Rights Under the Fair Credit Reporting Act.
4. Allow time to respond. The FCRA does not set a specific waiting period, so employers commonly allow a reasonable period for the candidate to dispute or explain the information.
5. Send an adverse action notice if the decision stands, following the adverse action process.

State and local laws can add steps. Some places limit when an employer may ask about criminal history, in some cases not until after a conditional offer. GoodHire’s ban-the-box guide explains how these fair chance laws generally work. Your ATS stages should reflect whichever rules apply where you hire.

Common handoff mistakes to set up against

Connecting your ATS and your screening provider

Many screening providers connect to ATS products so recruiters can start a check from the candidate record. GoodHire is not an ATS. Its HR tech integrations page says employers can launch background checks from within their existing workflow to get FCRA-compliant consent from candidates, securely access screening results and view candidate information alongside those results. GoodHire’s integrations page lists platforms including Greenhouse, iCIMS, Jobvite, Lever, SmartRecruiters, BambooHR and Workday, and says it can integrate with other platforms through its API. What an integration can do may vary by platform, so confirm the details for your system.

ATS vs. HRIS and Broader HR Software: What’s the Difference?

An ATS covers people who are applying. A human resources information system (HRIS) covers people who work for you. When a candidate is hired, their information typically passes from the ATS to the HRIS, which is where onboarding, employee records and often payroll and benefits live.

Some all-in-one HR platforms include a light ATS, and some ATS products include onboarding tools, so the lines can blur. For choosing HR, payroll and onboarding platforms more broadly, see GoodHire’s guide to HR software for small business.

What Hiring Records Should an ATS Help You Keep?

Your ATS is often the main place hiring records live, so its retention settings matter. Under EEOC regulations at 29 CFR 1602.14, employers covered by federal anti-discrimination laws generally must keep application forms and other hiring records for one year from when the record was made or the personnel action was taken, whichever is later. If a discrimination charge is filed, relevant records must be kept until the charge and any related lawsuit are finally resolved. State laws may require longer retention.

The federal Uniform Guidelines on Employee Selection Procedures also call for covered employers to keep information on how their selection procedures affect applicants by sex, race and ethnic group, with a simplified approach for smaller employers. If you collect race or ethnicity information for this purpose, the EEOC describes keeping it separate from the materials used to evaluate candidates, for example with a tear-off sheet. In an ATS, that usually means voluntary self-identification answers that hiring managers cannot see.

Federal contractors have had additional recordkeeping rules. The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued final rules in August 2026 that rescind its Executive Order 11246 regulations and revise other contractor requirements, so contractors should confirm which obligations still apply to them.

How to Choose an ATS: A Practical Checklist

Before you compare products, write down how you hire today: who approves roles, how many openings you fill in a year, who interviews and where candidates drop off. Then use these questions in demos and trials.

1. Workflow fit: Can you set up stages that match your process, including a stage for background checks and pending adverse action?
2. Requisition approvals: Can roles and offers require sign-off from the right people before they go out?
3. Hiring manager experience: Can managers review candidates and submit scorecards easily, including on a phone?
4. Scheduling and communications: Does it connect to your calendar and email, and does it keep a history of candidate messages?
5. Disposition reasons and reporting: Does it require a reason when a candidate exits, and can you report by role, stage and source?
6. Recordkeeping and data controls: Can you set retention periods, export records and limit who sees sensitive information, including self-identification data?
7. Automated screening: Which ranking or AI features are included, can you turn them off, and what audit or notice support does the vendor provide where the law requires it?
8. Background-check connection: Does it integrate with your screening provider, and what status and result information comes back into the candidate record?
9. HRIS handoff: Does new-hire data flow into your HR or payroll system without manual re-entry?
10. Pricing and growth: Is pricing based on users, open jobs or employee headcount, and how will cost change as your hiring volume grows?
11. Data ownership: If you switch systems later, can you export all candidate records and history?

If you fill only a few roles a year, a structured spreadsheet and a shared inbox may still work. The signs you have outgrown them are usually lost candidates, inconsistent communication and difficulty answering who was considered for a role and why.

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Wing Poon focuses on helping small businesses thrive. He’s spent his career launching products that help small businesses accomplish more—at Appodeal, Envoy, and now at Checkr. Outside of work, his podcast on work and purpose led to his own discovery, now expressed through his travel video storytelling.