Many organizations instruct their recruiters not to recruit candidates from companies with which they do business. So what do you (as a recruiter) do when a candidate currently employed by one of the companies on the "don't recruit from.." list calls you inquiring about an opportunity with your company. I have heard many different answers to this situation and would like to hear what the members on this site think.

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I think you need to ask your client how they'd like you to handle that scenario. I've found that it varies, but that the majority allow it as long as you did not recruit the person on their behalf...the person came to you. I recently had a client not allow it even under this circumstance because they had just hired three people from a direct competitor and didn't want to rock the boat too much, so it was a timing issue in that instance.
I tell them "the hard truth is I cannot recruit you out of XYZ firm or company ...they are a client it would be a breach of contract" (if that is the case) ...or I might say "it would be unethical based on our business relationship and our firm simply forbids it" (if not a breach, but our management simply forbids it).
Having a great relationship with the client helps in this instance, as Pam mentioned simply asking them about the individual (sometimes they want the person to move on!). But you have to be forthright with the client and ask them- you in many instances will gain an even stronger bond with your client by mentioning this- which should in turn make you more money in the long run.
If they called me, I work them! If I don't, the guy down the street will. I may ask for a brief letter from the candidate stating that they approached me and they are no longer happy in their current position. This way if it ever gets back to the company, I can prove that I did not "recruit" from them.... Depending on the relationship I have with the specific client, I may also call my primary contact and ask them how they would like me to handle the situation. (Of course without disclosing the candidates name!)

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