All businesses will be subject to the Victorian government's policy to legislate a right for employees to work from home two days a week if they reasonably can, Premier Jacinta Allan announced on Tuesday.
The premier had said an exemption would be considered for small businesses when launching a consultation period in August.
But while the legislation was still being drafted, the "key detail" was ticked off in a cabinet meeting on Monday.
Ms Allan said the policy would get more women back into the workforce, lifting participation rates and economic productivity.
"People want to see their right to work from home protected because it's at risk," she told reporters on Tuesday.
"It's at risk from employers who are ... refusing requests to work from home for people who can."
The decision would create a cost and compliance burden for "mum and dad" operators and sole traders with as few as one employee, Council of Small Business Organisations Australia chair Matthew Addison said.
"Small business don't have a team of lawyers to interpret this," he told AAP.
"They are already saying they lose a day a week on red tape - here's some more red tape for them."
Mr Addison said the election-year legislation appeared to "appeal to part of the population" and he doesn't believe there is an appetite for it to spread nationally.
Victoria's business and investment community have expressed a sentiment that the state is not business-friendly enough, spawning a catchcry of "Anywhere But Melbourne" and "Anywhere but Victoria".
"We have borders but businesses and capital don't," Victorian Chamber of Commerce acting chief executive Scott Veenker said.
"The economy is in such a fragile state ... this is just another reason for people to choose other states or other countries to trade in."
The policy, as described by the state Labor government, only applies to workers who can "reasonably" do their job from home.
"We haven't tested it and it's ambiguous by nature," Swinburne human resource management expert Peter Holland said.
"You cannot be the checkout person in a small shop and expect to work from home, but if you're a back-office person do you need to be at work every day?
"The mandate would be for those companies that are a bit recalcitrant - my way or the highway."
Professor Holland said small businesses could benefit from providing flexibility to workers in a tight labour market and compared the reforms to Australia introducing paid maternity leave in 1973 and superannuation in 1992.
"The world was going to fall in and it didn't," he said.
"It's a positive for everybody. We're in a different world now post-COVID."
The Victorian opposition is trying to avoid being wedged politically on the legislation, with Liberal leader Jess Wilson maintaining she supports working from home while demanding more detail from the government.
Ms Allan has repeatedly pushed back against claims the move may not be legal, pointing to advice about an "explicit provision" in the Fair Work Act for state-based anti-discrimination laws.
Section 109 of the Australian Constitution dictates that if a state law conflicts with a Commonwealth law, the latter prevails.
"We have advice that it is constitutionally valid," Ms Allan said.
"But let's be clear, what does it say about someone who wants to race off to the High Court to strip away a worker's right to work from home."
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