Applicant Tracking System (ATS)

What is Applicant Tracking System

An applicant tracking system (ATS) is a software that streamlines the recruitment process by automating the collection, sorting, and storage of job applications. It can screen resumes on specified keywords, schedule interviews, send automated emails, and track applicants through various stages of hiring.

Why It Matters

An applicant tracking system improves the efficiency of the recruitment process by reducing manual workload and saving time, otherwise spent on manually screening hundreds of applicants. It also ensures fairness in applicant evaluation by minimizing bias using consistent assessment criteria.

ATS helps businesses track candidates through each stage of the recruitment process, from application to interview, and make smarter, data-backed hiring decisions. Because ATS software can automatically send emails and updates, it speeds up response to applicants, improving the overall hiring experience and providing employers with a competitive edge.

Use Cases

For small and mid-sized businesses with 10-500 employees, especially in the construction, dental, accounting, and franchise sectors, an applicant tracking system can provide valuable support. For instance, construction companies often hire skilled labor for short-term, project-based roles, such as electricians, plumbers, and machine operators. Using an ATS, they can quickly identify the right candidates based on trade certifications, safety training, and experience. Additionally, they can use ATS to keep track of OSHA certifications and other regulatory requirements, thereby maintaining compliance with the labor laws.

For dental clinics, using an ATS can speed up the hiring process to maintain patient care quality even during staff turnover. They can use ATS to automatically screen candidates for clinical roles such as dental assistants, hygienists, and office staff based on specific licenses and qualifications. By safely storing candidate credentials, dental clinics can use ATS to maintain detailed records for compliance and audits.

In accounting firms, the hiring needs usually increase during the tax season. Using an ATS, a small accounting firm with about 15 regular employees can meet its high-volume hiring needs during peak seasons and quickly filter candidates for credentials like CPA or CMA. Furthermore, leveraging the security features of ATS, the firm can secure sensitive applicant information relevant to financial roles.

Similarly, in franchise businesses, retail stores or food chains can use ATS to manage hiring across multiple locations and for high turnover roles such as cashiers, servers, and kitchen staff. Using standard evaluation criteria, local branches can handle recruitment, while maintaining consistency in staff recruitment with oversight from the head office.

Legal Considerations for Compliance

When using an applicant tracking system, businesses must adhere to the legal considerations as described below:

• Data Privacy and Protection: Data privacy laws such as the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in the U.S. mandate transparency in the collection, usage, and storage of applicant data. Therefore, businesses must ensure their ATS offers secure data encryption, access controls, and audit trails. Additionally, businesses must establish clear data retention policies to keep applicant data only for the duration it is needed and then delete it securely in accordance with legal requirements.
• Equal Employment Opportunity (EEO): To maintain compliance with EEO laws, businesses must ensure their ATSs are free from any built-in biases that could potentially discriminate against applicants on the basis of race, gender, age, religion, nationality, disability, or other protected characteristics. In the U.S., it is mandatory for businesses employing more than 100 employees, to maintain EEO-1 reporting data, which tracks the race, gender, and job category of applicants and employees. Therefore, the ATS should be able to collect and store this data separately from the main application to avoid bias.
• Accessibility (ADA): The Americans with Disabilities Act (ADA) requires employers to ensure their application process through an ATS is accessible to individuals with disabilities, failing which they risk discrimination claims or legal penalties. Therefore, the ATS should work with screen readers, keyboard-only navigation, and other assistive technologies. Businesses must also conduct regular audits and user testing to ensure the ATS remains compliant and inclusive for all applicants.
• Background Checks and Consent: The Fair Credit Reporting Act (FCRA) in the U.S. has outlined guidelines that employers must follow when using an ATS to perform background checks. These include informing the applicants, seeking their written consent before performing these checks, and storing the signed consent forms.
• Audit Trails and Documentation: To prove their hiring practices are fair, transparent, and consistent, businesses must maintain records; that can also serve as key evidence during audits or legal disputes. The ATS must log every action taken, from resume reviews to interview notes and rejection reasons, along with timestamps and user IDs.

Considerations Affecting Applicant Tracking System

When implementing or managing an applicant tracking system, several key considerations can affect HR compliance and functions such as payroll, time tracking, and employee classification. These include:

• Integration: If the ATS is not properly integrated with automated payroll services or time-tracking software, it can result in delayed onboarding, missed hours, incorrect gross pay, or compliance issues.
• Employee Classification: The ATS must capture relevant information during the hiring process to inform correct job classification, such as full-time, part-time, temporary, or an independent contractor, failing which businesses risk legal and tax compliance problems.
• Time Tracking: Incorrect setup of time and attendance profiles of shift schedules, especially in sectors like retail, hospitality, or construction, where employees work hourly or in shifts, can result in missed hours, unapproved overtime, payroll disputes, and non-compliance with labor laws.

Common Misunderstandings

Misunderstandings about applicant tracking systems can impact the hiring process and reduce its efficiency. These include:

• ATS is Only for Large Companies: Even small businesses, with fewer than 100 employees can use an ATS to streamline the hiring process, reduce the time-to-hire, and ensure consistent candidate evaluation.
• ATS Eliminate the Need for Human Recruiters: ATS is not a replacement for human recruiters. It automates the process, but recruiters are still the final decision-makers and cultural ambassadors of their companies.
• ATS Always Finds the Best Candidates: Because an ATS filters resumes on specified keywords, it can overlook qualified candidates who don’t use those exact keywords in their resumes.
• ATS Can Read Every Resume Format: An ATS may not be able to read resumes that have non-standard formats, complex layouts, or graphics.
• ATS Just Screen Resumes: In addition to screening resumes, most ATSs can help manage job postings, track applicants across stages of the hiring process, and send out email communication.
• ATS Rely Only on Keywords for Screening: Modern ATS, with more sophisticated algorithms, can work beyond keywords, parsing resumes on relevant experience, qualifications, and even the formatting.
• A Rejected Resume Is Lost Forever: If the rejected candidates meet other criteria, their resumes are stored in the system for future opportunities.

Common Pitfalls and How to Avoid Them

While applicant tracking systems offer significant advantages, there are some common pitfalls that businesses can avoid. These include:

• Over-reliance on Keywords: Can result in overlooking qualified candidates whose resumes do not match the exact specified keywords. Balance the screening process by programming the system to consider the context of the candidate’s experience and qualifications.
• Lack of Mobile Compatibility: Can degrade candidate experiences for those applying via smartphones. Use a mobile-friendly ATS to allow applicants to submit resumes and complete applications seamlessly on any device.
• Not Updating the ATS: Can cause inefficiencies in the hiring process, besides failing to keep pace with evolving hiring trends and compliance requirements. Keep the ATS updated to adapt to the dynamic job market and regulatory landscape.
• Complicated Application Process: Can cause drop-offs. Keep applications simple and seek only the essential information for improved candidate experience.
• Lack of Custom Job Descriptions: Can filter out good candidates due to mismatches in job descriptions. Use customized job postings specifying the qualifications and skills required to identify the right candidates.
• Unclear Communication: ATS-triggered automated responses may come across as impersonal. Keep communication transparent and empathetic to not only keep candidates informed about their application status but also improve the overall hiring experience.
• Inadequate Data Privacy and Security: Can expose sensitive information to data breaches or lead to non-compliance with privacy laws. Implement robust security measures to safeguard the interests of the business and the candidates, and ensure compliance with regulations like the GDPR and CCPA.
• Untrained HR Teams: Can lead to underutilization or mismanagement of the system. Train HR teams to improve efficiency and maximize the system’s potential.

How Fingercheck Helps

Fingercheck’s integrated applicant tracking system streamlines the entire recruitment process to reduce administrative burdens. It simplifies resume collection, candidate screening, and interview scheduling. It automates repetitive tasks and organizes candidate data for easy access in future, enabling businesses to focus on engaging with top candidates.

Seamlessly integrating with time tracking, payroll and HR functions, the Fingercheck app reduces the risk of payroll or classification errors to make the recruitment process more efficient and ensure labor law compliance.Explore Fingercheck’s user-friendly platform to make the hiring processes smarter, reduce resource wastage, and power business growth. Contact us now!

Fingercheck and any related entities do not offer tax, accounting, or legal advice. This content is designed for informational purposes only and should not be considered a source of tax, legal, or accounting advice. It is recommended that you consult your tax, legal, and accounting advisors before undertaking any related activities or transactions.