The Source-Company Clearance Standard: Cleared, Conditional, or Off-Limits

Before a recruiter adds a company to a source list, someone has to decide whether the team may approach its employees, and record why. This standard is for in-house recruiters, sourcers, talent leaders, and founders running their own searches. It turns off-limits windows, customer and supplier relationships, prior-placement obligations, and no-poach legal exposure into one gradeable verdict - Cleared, Conditional, or Off-Limits - with an audit trail, so two sourcers grading the same company reach the same answer.

Every other target-list guide tells you how to find and rank source companies. None tells you whether you are allowed to touch them, which is the check that actually blocks a search on a Tuesday. This is that document.

Why "can we source from this company" is a distinct check

Clearance answers a different question from fit. Fit asks whether a company holds the people you want; clearance asks whether you are permitted to approach them at all. A company can pass fit perfectly and still be Off-Limits, and grading it worth sourcing does nothing to change that.

The hard block is almost never the antitrust statute. It is the contractual off-limits window - the firm's commitment not to recruit from a client - because the recognized professional body deliberately sets no single number. The Association of Executive Search and Leadership Consultants (AESC), the body that anchors the "hands-off policy" for the industry, is explicit that scope varies too much to standardize: its guidance describes worldwide off-limits for an entire company, off-limits for a division or corporate office, and off-limits for a functional area, any of which may run one or two years, "influenced by the size of the client company and the relationship between client and firm."

That deliberate silence is the whole problem. It leaves each team to codify its own default, and a team that never writes one down grades the same company differently depending on who is on shift. The fix is a standard with a fixed decision procedure and a fixed record.

Because the map is small, clearance has to run before fit, not after. If you fit-grade first, you spend hours ranking companies you are not allowed to touch, and you tempt a sourcer to source from a top competitor precisely because it scored well. Clearance first means the hard block is applied while the list is still cheap to edit.

The three verdicts, defined so two people grade the same

The standard has exactly three verdicts. Each is defined by what it permits and by what evidence forces it, so the grade is a lookup, not a judgment call.

The line between Conditional and Off-Limits is scope and time. An Off-Limits verdict is total and current: an active client, or a naked agreement still in force, or a worldwide window that has not expired. A Conditional verdict is bounded: the block covers only a division or function, or it lifts on a recorded date, or the conflict is resolved and merely noted. Everything else that passes both checks is Cleared.

The relationships that trigger a block, and how each expires

Six relationship types can block a company, and each expires by a different mechanism. Tag every company with one type or an explicit "none" - a blank is not an answer.

The core trigger is the active client. A search firm is almost always prohibited from recruiting candidates out of its existing clients, and for an in-house team the analog is any company you have a standing hiring or reciprocal-referral arrangement with. This block lasts for the duration of the engagement.

A prior client within the window is the same relationship after the assignment closed but before the off-limits period lapsed. The window is contractual: engagement duration plus an additional period, typically one to two years, sometimes 18 to 24 months on an active client list. It expires on the stated date in the signed agreement.

A prior-placement source is a company you recently placed a candidate into. It carries a guarantee-period obligation that the client-list check often misses, because the company is not a client - you sourced from it. Check placement history separately.

Customer, supplier, and channel-partner relationships are the newest addition. These vertical relationships can create exposure where the two firms compete for the same workers, and they expire only when the underlying contract's no-hire terms lapse or are removed.

The point of tagging every company is that the tag drives the verdict deterministically. An active client is Off-Limits. A prior client with an unexpired window is Off-Limits until the date, then Conditional or Cleared. A supplier where you compete for the same engineers is at least Conditional and needs the legal check below.

The antitrust check that in-house teams cannot skip

Since 2016, the DOJ has treated "naked" no-poach and wage-fixing agreements between competitors as criminal, and that exposure applies to in-house teams with no client roster at all. The Antitrust Division issued Antitrust Guidance for HR Professionals in 2016, warning it would criminally investigate and potentially prosecute agreements among employers to set compensation or not to hire each other's employees.

This is the check an in-house team inherits without the contractual guardrails an agency has. An agency's off-limits list flows from client contracts; an in-house recruiter has no such list but is still fully exposed to antitrust law and to reciprocal hands-off arrangements. In Refolk's index of professional profiles, agency-side recruiters at staffing and recruiting firms outnumber in-house recruiters at software companies by 6.6 to 1 - so most people who write off-limits rules are contract-bound agency recruiters, and in-house teams adopting that vocabulary must bolt on the antitrust check the agency framing does not require.

The load-bearing outcome sets the stakes. Juries have acquitted defendants - DaVita and its chairman on all counts in 2022, four Maine home-health executives in 2023 - but acquittal is not repeal. The DOJ has established naked no-poach and wage-fixing agreements as per se violations of Section 1 of the Sherman Act and proper subjects of criminal prosecution. And when a plea lands, the cost is real: health care staffing company VDA OC LLC pleaded guilty and was sentenced to a $62,000 fine plus $72,000 in restitution to affected workers.

The compliance question is therefore narrow and specific: is there a naked agreement in force? A restraint that is ancillary to a legitimate collaboration and narrowly tailored is a different animal from a bare agreement between competitors not to hire each other's people. Screen for the bare version, and if one exists, the company is Off-Limits until it is unwound.

The question is not whether anyone has been convicted. It is whether the agreement is naked. </pull> ## The clearance procedure, step by step Run these eight steps in order. Clearance steps three through five come before the fit step, because a block is cheaper to apply than a fit grade is to compute, and because fitting first tempts a sourcer to touch a company they cannot.

steps title: Grading a source company from scope to logged verdict step: Define the search scope and ICP :: Fix role, level, geography, and time horizon. Done when the profile is sharp enough that two recruiters would reach for the same kind of person. step: Draft the candidate target list :: List direct competitors, adjacent industries, and feeder orgs, typically 20 to 50 companies. Done when the named list is saved as a reusable artifact. step: Run the relationship check per company :: Flag active client, prior client in window, customer, supplier, channel partner, or prior-placement source. Done when each company is tagged with a type or an explicit none. step: Run the legal and antitrust check :: Screen for any no-poach, non-solicit, or reciprocal gentlemen's agreement, written or spoken. Done when you confirm no naked agreement is in force. step: Apply the off-limits window test :: Confirm whether any window of engagement plus one to two years is still open and when it expires. Done when an expiry date is recorded or the field reads n/a. step: Apply the fit test :: Grade skill and stack overlap, comp-band compatibility, geography, and stage or size. Done when fit resolves to pass or fail. step: Assign the verdict :: Record Cleared, Conditional, or Off-Limits with reason and expiry. Conditional must be countersigned by the talent leader or counsel. Done when verdict, rationale, and reviewer are recorded. step: Log and schedule re-review :: Timestamp the entry and set a next-review date, quarterly for high-velocity functions and annually for specialist or executive roles. Done when the record carries a next-review date.

What each check proves, and what it looks like when it lies

The relationship check proves whether a contractual or standing obligation binds you. It lies when a prior-placement source hides behind a clean client list - the company is not a client, so the tag reads "none," while a guarantee-period obligation is quietly live.

The legal check proves whether a naked agreement exposes you. It lies when a team reads a jury acquittal as permission; per se liability survived those verdicts intact.

The window test proves whether an expired obligation has genuinely expired. It lies when a flat "one year" default is applied to a contract that actually specified two years worldwide - the standard leaves no single number, so the default can be wrong in either direction.

When the relationship and legal work is the friction - resolving who a company's true competitors are, or building the target list you have to clear in the first place - Refolk lets you ask for the people and companies in plain English and get them back tagged by employer and tenure, so the list you hand to the clearance check is already clean.

The record that survives an audit

A clearance decision that is not written down is not a standard; it is a memory. No public body specifies the fields to record per decision - this is the standard's novel contribution - but the anchors are clear. AESC advises that search agreements note the level of client confidentiality, potential conflicts of interest that have been resolved, and the off-limits companies; its Client Bill of Rights lists off-limits, conflicts, guarantees, and data management as terms a written agreement should fix.

Translate those into a per-company record with these fields:

company: [legal name]
relationship_type: active client | prior client | customer | supplier | channel partner | prior-placement source | none
legal_check: no naked agreement in force | agreement found (describe) | resolved conflict (note)
window_open: yes | no | n/a
window_expiry: [date] | n/a
fit: pass | fail
verdict: Cleared | Conditional | Off-Limits
rationale: [one line tying the verdict to the checks above]
reviewer: [name; required if Conditional]
decided_on: [date]
next_review: [date]

Who signs off a Conditional case is not fixed by any published body, so assign it as policy: the talent leader or general counsel countersigns every Conditional verdict. That countersignature matters most where the market is thin. In Refolk's index there are 77 UK sourcers against 1,351 in the US, a 17.5x gap, so an off-limits verdict removes proportionally far more of the reachable market in the UK - a Conditional grade there has outsized cost and earns the second signature.

How this goes wrong: failure modes and false positives

Most bad clearance decisions are not close calls. They are one of a small set of repeatable errors, each with a false positive that clears a company you should have blocked. Learn the shape of each.

The window treated as fixed. Applying a flat "one year" ignores that AESC sets no single number and that scope varies by division and function. The false positive is clearing a company whose signed contract specified a two-year worldwide block. Check the signed search agreement, not the industry rule of thumb.

"No contract, no risk" for in-house teams. An informal reciprocal understanding is still criminally exposed. The false positive is grading a peer company Cleared because nothing is signed. Check for any reciprocal non-solicit practice, written or spoken.

Acquittals misread as safe. The DaVita and Maine acquittals do not repeal per se liability. The false positive is assuming no-poach is now legal. Check that any restraint is ancillary to a legitimate collaboration and narrowly tailored, not a bare agreement between competitors.

Vertical relationships assumed exempt. The Guardian consent decree shows customer and supplier no-hire clauses can be challenged. The false positive is clearing a supplier because "we don't compete." Check whether you actually compete for the same workers.

Expiry never recorded. A Conditional verdict with no expiry date silently becomes permanent, or lapses unnoticed. Check that every record carries both an expiry and a next-review date.

Fit passed on a stale map. Comp bands and competitor sets drift; a map older than a quarter for engineering or sales misgrades fit. Check the last-refresh timestamp before trusting a pass.

Prior-placement source overlooked. A company you recently placed into may carry a guarantee-period obligation not captured as "client." Check placement history, not just the client list.

The verification checklist and keeping it current

Before you call a company graded, run this checklist. Every item is a checkable statement, not a topic, so a reviewer can tick or reject each one.

A clearance list decays. Windows expire, contracts renew, competitor sets shift, and reciprocal arrangements you never signed can form quietly. Re-review high-velocity functions such as engineering and sales quarterly, and specialist or executive roles annually. Two moving targets deserve a standing watch: the off-limits window on active clients, which lifts on a contract date you should calendar rather than remember, and the antitrust landscape, where the frontier keeps moving. The Guardian consent decree in December 2024 was the first vertical no-poach action, which means customer and supplier companies now belong in the relationship check even though they would not have a few years ago.

Do not chase current values. Chase the mechanism. The window expiry lives in the signed agreement, so re-read the agreement. The antitrust exposure turns on whether an agreement is naked, so re-run the legal check whenever a new reciprocal arrangement forms or a contract term changes. A standard stays current not by memorizing today's cases but by re-applying the same tests on a schedule, and by treating every Conditional verdict as a dated promise to look again.