Applicant Tracking System (ATS): What It Means for Employers

What it means in practice

An applicant tracking system sits at the front of the hiring process run by talent acquisition. It typically stores job postings, applications and resumes, screening answers, test results, interview notes and offer status, and it can rank or filter candidates automatically. Federal law regulates the decisions made with those tools and the records they create, not the software itself. Title VII makes it unlawful for an employer to fail or refuse to hire any individual because of race, color, religion, sex or national origin, or to limit, segregate or classify applicants in a way that would deprive them of employment opportunities on those grounds (42 U.S.C. 2000e-2(a)). The statute defines an employer to include "any agent of such a person" (42 U.S.C. 2000e(b)).

Who is covered. The EEOC says a business is covered for complaints involving race, color, religion, sex (including pregnancy), national origin, disability or genetic information if it has 15 or more employees who worked for at least twenty calendar weeks in this year or last, and for age complaints if it has 20 or more. It says virtually all employers are covered by the Equal Pay Act, and that an employer outside the federal laws may still be covered by a state or local anti-discrimination law. Employers subject to Title VII with 100 or more employees must also file the annual EEO-1 report (29 CFR 1602.7); see diversity for how that report works.

Screening steps are selection procedures. The Uniform Guidelines on Employee Selection Procedures define a selection procedure as any measure, combination of measures or procedure used as a basis for any employment decision, from tests and work experience requirements through "informal or casual interviews and unscored application forms" (29 CFR 1607.16Q). Knockout questions, minimum-experience filters and automated rankings used to decide who moves forward fall within that definition when they are used as a basis for hiring decisions. The Guidelines say recruitment practices designed to attract applicants are not themselves selection procedures (29 CFR 1607.2C). They define the selection rate as the proportion of applicants or candidates who are hired, promoted or otherwise selected (29 CFR 1607.16R), and adverse impact as a substantially different rate of selection that works to the disadvantage of a race, sex or ethnic group (29 CFR 1607.16B). They do not apply to the age law or to the disability provisions of the Rehabilitation Act (29 CFR 1607.2D).

The four-fifths rule. A selection rate for any race, sex or ethnic group that is less than four-fifths (80%) of the rate for the group with the highest rate will generally be regarded by the federal enforcement agencies as evidence of adverse impact, while a greater rate generally will not (29 CFR 1607.4D). The same section says smaller differences may still be adverse impact where they are significant in statistical and practical terms, and larger differences may not be where they rest on small numbers and are not statistically significant. If the total selection process for a job shows adverse impact, the individual components should be evaluated (29 CFR 1607.4C). Under Title VII itself, a disparate impact claim is established when a particular practice causes a disparate impact on a protected basis and the employer fails to show it is job related for the position and consistent with business necessity, or refuses to adopt an available alternative practice (42 U.S.C. 2000e-2(k)).

The Guidelines' current status. Part 1607 remained in the eCFR as of October 15, 2026. The EEOC's National Enforcement Plan, issued June 4, 2026, says the agency will prioritize disparate treatment theories, eliminate disparate impact theories in investigations "to the maximum degree possible" under Executive Order 14281, and not pursue litigation advancing disparate impact claims. The federal regulatory agenda lists EEOC rules to rescind the interpretive portions of Part 1607 (target listed as November 2026) and, separately, its recordkeeping requirements. A Department of Labor final rule notes a June 9, 2026 Justice Department Office of Legal Counsel opinion concluding that the Guidelines "embrace an unconstitutional reading of Title VII." The disparate impact provision itself is in the statute, so check the EEOC's regulations page for the Guidelines' status before relying on them.

Federal contractors and the "Internet Applicant." Many systems were configured around the Office of Federal Contract Compliance Programs definition of an Internet Applicant: a person who expresses interest through the Internet or related electronic technologies, whom the contractor considers for a particular position, whose expression of interest shows the basic qualifications for it, and who does not withdraw before an offer (41 CFR 60-1.3). Executive Order 14173 revoked Executive Order 11246 on January 21, 2025, and a Department of Labor final rule published August 21, 2026 removes the Part 60-1 regulations, including that definition, and the contractor copy of the Guidelines at 41 CFR Part 60-3, effective October 26, 2026. The rule says removing Part 60-3 does not affect other agencies' application of the Guidelines.

Recordkeeping. Under the EEOC's regulation, any personnel or employment record an employer makes or keeps, including requests for reasonable accommodation, application forms submitted by applicants and other records having to do with hiring, must be preserved for one year from the making of the record or the personnel action involved, whichever is later (29 CFR 1602.14). If a charge is filed, records relating to the charging party and to all other candidates for the same position, including their application forms or test papers, must be kept until final disposition. The age discrimination rules separately require employers to keep job applications, resumes and other employment inquiries submitted in response to an advertisement, records of any refusal to hire, job orders sent to employment agencies, employer-administered test papers and job advertisements for one year from the personnel action (29 CFR 1627.3(b)(1)). The Guidelines let employers with 100 or fewer employees keep simplified annual records of hires, promotions and terminations for each job, applicant counts by sex and, where appropriate, race and national origin, and the selection procedures used (29 CFR 1607.15A(1)), and call for safeguards so demographic data is used only for appropriate purposes (29 CFR 1607.4B).

Disability and accessible applications. It is unlawful to use qualification standards, employment tests or other selection criteria that screen out or tend to screen out a person with a disability unless they are job related and consistent with business necessity (29 CFR 1630.10; 42 U.S.C. 12112(b)(6)), and tests must be given so that results reflect the skill being measured rather than an impaired sensory, manual or speaking skill (29 CFR 1630.11). Before an offer, an employer may not ask whether an applicant has a disability or about its nature or severity, but may ask about the ability to perform job-related functions (29 CFR 1630.13(a) and 1630.14(a)). Justice Department guidance from May 12, 2022 says employers should give applicants enough information about hiring technology to decide whether to seek an accommodation, and gives the example of a blind applicant who needs an accessible version of an online interview program. Medical information from a post-offer examination must be kept on separate forms and in separate medical files (29 CFR 1630.14(b)(1)), so it should not sit in the candidate profile. See Americans with Disabilities Act (ADA).

Background checks. When an ATS triggers a consumer report for employment purposes, the Fair Credit Reporting Act requires a clear and conspicuous written disclosure "in a document that consists solely of the disclosure" and the applicant's written authorization before the report is obtained (15 U.S.C. 1681b(b)(2)); the FTC says the notice cannot be in an employment application. Before taking adverse action based on the report, the employer must give the applicant a copy of the report and a written description of their rights (15 U.S.C. 1681b(b)(3)). After the action, the notice must include the reporting agency's name, address and telephone number and a statement that the agency did not make the decision (15 U.S.C. 1681m(a)). The FTC says reports and information from them must be disposed of securely.

From applicant to new hire. USCIS says you may not ask an individual who has not accepted a job offer to complete Section 1 of Form I-9, and E-Verify says prescreening prospective employees is prohibited. Verification belongs in onboarding, after acceptance; see Form I-9. Once hired, records usually move into a human resources information system (HRIS), but the ATS copy still falls under the retention periods above.

Where states differ. This entry describes the federal baseline. Two examples from official California pages: the Civil Rights Council says its regulations on automated-decision systems took effect October 1, 2025, that such assessments can be an unlawful medical inquiry, and that employers must keep employment records, including automated-decision data, for at least four years. The Civil Rights Department's Fair Chance Act FAQ says employers with five or more employees generally may not include conviction-history questions on a job application before a conditional offer, and that an employer withdrawing an offer must make an individualized assessment, give written notice and allow at least five business days to respond. Other states and cities have their own rules, so check your state agency.

Questions employers ask. Do we keep applications from people we never interviewed? Yes; 29 CFR 1602.14 covers application forms submitted by applicants, not only finalists. Can our application ask about disabilities? Not before a conditional offer, beyond questions about the ability to perform job-related functions (29 CFR 1630.13 and 1630.14). Does at-will employment change hiring rules? No; at-will employment concerns ending employment, while Title VII separately bars refusals to hire on protected grounds (42 U.S.C. 2000e-2(a)). Can the ATS collect I-9 data at application? No; Section 1 waits until the offer is accepted (USCIS).

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