"It's never a good idea to force your employees under fear of losing their jobs to come to work," Schmidt told CNBC's "Squawk Box." "It just doesn't produce the right outcome."
"If the answer is that employees are going to be forced to come to work in order to do their job out of genuine fear of infection and significant health problems, it's going to be a tough time," he added.
As some states begin to ease coronavirus-related restrictions, employers are wondering when and if to bring employees back to work. Several companies that easily allow employees to work remotely, such as in technology and financial services, can extend work-from-home policies. But others, like manufacturing, will likely require people to be in the company's workspace.
NBC News reported earlier this week that a handful of Tesla employees in California said they felt unsafe to return to work as the plant reopened, but were pressured to do so over fear of potential retaliation. Tesla's HR boss also emailed employees on Wednesday, saying they may not be eligible for government unemployment benefits if they don't return to work, CNBC reported. Tesla restarted some vehicle production in its Fremont, California, plant, in violation of local orders.
Schmidt did not speak specifically to Tesla, but said that corporations will soon find themselves in three categories: people who can't go to work, people who don't want to or are worried about exposure, and people who can't wait to get out of the house.
"My guess is you're going to see pods of people, which will organize themselves. This group will be over in this remote place, this group will be in the central office, these people will never come in either because they have legitimate fears until this thing gets resolved," Schmidt said. "Employers will have to give employees some kind of flexibility."
Schmidt was Google's chief executive from 2001 to 2011, before he transitioned to executive chairman of Google and then Alphabet until 2018. Schmidt last year did not seek reelection to the board as his latest term came to an end, but he kept his title as technology advisor. Though CNET reported last week that Schmidt stopped serving as technical advisor in February.