How ATS Systems Work: AI in Applicant Tracking Systems
Understanding how AI-powered ATS systems work, their role in hiring, and the compliance implications under LL144 and EU AI Act.
What is an ATS?
An Applicant Tracking System (ATS) is software used by employers to manage job applications. Modern ATS systems increasingly use AI to screen, rank, and filter candidates.
How AI-Powered ATS Works
1. Resume Parsing
AI extracts structured data from resumes — skills, experience, education — and standardizes it for comparison.
2. Candidate Screening
AI algorithms screen candidates against job requirements, scoring and ranking them based on predicted fit.
3. Keyword Matching
Natural language processing identifies relevant keywords and phrases in resumes and job descriptions.
4. Predictive Analytics
Machine learning models predict candidate success based on historical hiring data.
5. Automated Communication
AI chatbots handle initial candidate screening and scheduling.
Compliance Implications
NYC LL144
If your ATS uses AI to substantially assist or replace hiring decisions, it likely qualifies as an AEDT and requires:
- Annual independent bias audit
- Public summary of audit results
- Candidate notification
EU AI Act
AI-powered ATS systems are classified as high-risk AI and must meet:
- Risk assessment requirements
- Data governance standards
- Human oversight mechanisms
- Transparency obligations
How to Check if Your ATS Needs an Audit
- Does it use machine learning or AI to screen candidates?
- Does it generate scores, rankings, or recommendations?
- Does it substantially assist or replace human decision-making?
If you answered yes to any of these, you likely need a bias audit. Use our bias scanner to check your job descriptions, and browse our directory to find an auditor.