Last April, Gov. Gavin Newsom (D) told California’s 95,000 hybrid state employees to spend at least two days each week in the office. Then, three months ago, he abruptly doubled that requirement to four in-person days, starting July 1.
The realization of this mandate seems unlikely. First, the Professional Engineers in California Government negotiated a one-year reprieve. Days later, the California Attorneys, Administrative Law Judges and Hearing Officers union also secured an extension. In both cases, the unions gave up higher salary demands to avoid working four days in the office.
The symmetry of those deals — short-term payroll givebacks traded for long-term flexibility — makes one wonder: Was the four-day order ever meant to stick? Or was it an opening bid that lured unions to the table on the governor’s terms, letting him shave labor costs in a year when the state is facing a projected $12 billion deficit?
If the goal is efficiency, the mandate looks upside-down on paper. Since 2021, the California Department of General Services has significantly reduced its leased office space due to increased telework, achieving a reduction of 1.2 million square feet in the Sacramento area alone. This reduction represents nearly 14 percent of the total area the department leased in 2020.
Unions point out that reversing course would force agencies to reopen or reacquire space that has already been surrendered, wiping out the savings and piling on property, utilities and maintenance costs. SEIU Local 1000 estimates the state has saved “at least $700 million” from telework-enabled downsizing, and warns that re-expansion could cost “hundreds of millions each year.”
Lawmakers are uneasy: No one in the administration can say what full compliance would actually cost. At a May budget hearing, officials conceded they had never produced a statewide fiscal impact analysis for the four-day rule. That omission undermines the mandate’s credibility as a cost-cutting move and lends weight to the view that the order’s real value lay in the bargaining leverage it created — not in bricks, mortar or spreadsheets.
Relocation costs are another line on the balance sheet. Hybrid schedules have also become the state’s strongest retention tool. National research finds that allowing employees to work remotely at least half the time cuts attrition by roughly 50 percent, chiefly by eliminating commutes and giving workers more control over their day.
Replacing a skilled public-sector professional is not cheap; Gallup pegs the price at one-half to twice the departing worker’s annual salary when hiring, training and productivity ramp-up are counted.
Even a modest exodus triggered by a four-day mandate could therefore seriously contribute to the state's budget problems. Worse, higher vacancy rates drive agencies to offer richer salary steps and hiring bonuses to stay competitive, compounding payroll pressure over time.
Seen through that lens, the governor’s hardline order looks fiscally self-defeating. By threatening to swell real-estate costs and raise future recruiting bills, it contradicts the professed aim of streamlining state government. As a bargaining chip, however, it worked: unions swapped worksite flexibility for near-term concessions that help close the deficit without locking taxpayers into long-term spending.
The drama is unlikely to end at the California border. Indiana’s new governor, Mike Braun, signed Executive Order 2025-16 directing all state workers back to their desks by July 1 of next year, but left “limited exceptions” to be defined in ongoing contract talks — a structure that mirrors Newsom’s mandate-plus-negotiation cycle.
For city governments hemmed in by slumping downtown real-estate markets, the temptation to copy this strategy will be strong: announce a sweeping return-to-office rule like in Philadelphia, satisfy commercial landlords and commuter-rail operators, then barter flexibility back to employees in exchange for delayed raises, reduced stipends or slower pension growth. If that pattern holds, 2025 could mark the moment when physical presence became a standard bargaining currency across the public sector.
California’s experiment offers a simple lesson. Work-location policy can no longer be an edict imposed from the top; it is now high-value tender in labor talks. Executives — public and private — who cling to blanket attendance quotas risk losing twice: first by igniting costly attrition, and then by negotiating from weakness after backlash sets in. A smarter path ties in-office requirements to clear, measurable outcomes. When key performance indicators dip, more days onsite can kick in automatically; when performance holds, flexibility remains.
In the Golden State, the final chapter is not yet written. But the opening act has revealed a new reality: Where people work is as negotiable as what they earn.
Whether Newsom scripted his four-day decree as deliberate bait or merely turned a misstep into leverage, he has shown other leaders a tactic they may soon deploy — and one that unions have already learned how to turn to their own advantage.
Gleb Tsipursky, Ph.D., serves as the CEO of the hybrid work consultancy Disaster Avoidance Experts and authored the best-seller “Returning to the Office and Leading Hybrid and Remote Teams.”
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