New ruling adjusts work-from-home policies for state workers

California state agencies can compel employees to come to the office even if their union-negotiated contracts promise them the right to work from home.

That’s the gist of a labor arbitrator’s decision in a dispute between the California Public Employees’ Retirement System and the union that represents state attorneys.

The decision came down last week in midst of the Newsom administration’s push to call tens of thousands of California state workers back to the office, adjusting the workfrom-home policies the state adopted during the COVID-19 pandemic.

Newsom signaled that shift when he released a January budget proposal that sought to save $51 million by terminating the telework stipends the state has been providing to many public employees since the pandemic. Then, his administration followed up with an April order directing state employees to work in the office two days a week beginning next month.

The new arbitration focused on a March 2022 directive at CalPERS for its employees to work in the office three days a week. The attorneys union, which is known by the acronym CASE, challenged the order and pointed to language in its contract stating that employee telework requests “shall not be denied except for operational needs.”

Arbitrator Katherine Thomson’s decision reflects the difficult dynamics all kinds of workplaces have experienced since the pandemic. CalPERS General Counsel Mathew Jacobs and other leaders at the pension fund grew concerned about the organization’s culture deteriorating with employees working from home, along with some performance issues.

Most of the attorneys, meanwhile, preferred working from home and maintained that they kept up their productivity outside of the office. CalPERS saw a sudden and unusual spike in turnover after the three-days-a-week policy took effect, according to the arbitration decision.

“As a result of the high attorney vacancy rate, the legal office became understaffed,” the decision says. CalPERS then referred work to the Department of Justice, which billed at $220 an hour and allowed its attorneys to work from home.

Thomson nonetheless rejected the union’s grievance, finding that CalPERS executives had legitimate operational reasons to require attorneys to work in the office, such as improving communication.

“CalPERS telework policy remains as it has been and the agency’s leaders have found it to be successful,” CalPERS chief of public affairs John Myers said.

CASE President Timothy O’Connor said the union has several other grievances moving forward contesting return-tooffice policies. He said the decision in the CalPERS case does not mean arbitrators in other cases will rule the same away.

“We’re still aggressively defending our members in the (return-to-office) mandate and continuing to use every strategy that’s available,” O’Connor said.

Other unions also are preparing to challenge the Newsom administration’s return-to-office order, including the largest one, SEIU Local 1000.