"A government that tells its citizens what they may say will soon be dictating what they may think," said Justice Janice Rogers Brown, one of the dissenters in Monday's 4-3 ruling.
But the majority said free expression isn't violated by an injunction against bigoted speech that has already been found, by a jury, to be so extreme and pervasive that it causes a hostile and discriminatory work environment.
One justice, Kathryn Mickle Werdegar, described employees as a "captive audience" and said speech can be restricted in the workplace in ways that wouldn't be allowed elsewhere. She said the workers in this case could have escaped the harassment only by quitting their jobs.
A jury had already awarded $135,000 to eight employees of Avis Rent-a-Car at San Francisco International Airport. They accused supervisor John Lawrence of constantly calling them vulgar and derogatory names, in Spanish and English, in 1991 and 1992, based on their ethnicity and lack of English skills. They said Avis did nothing to restrain him.
Superior Court Judge Carlos Bea ordered Lawrence not to use epithets toward Hispanic workers and ordered Avis to stop him, if possible. His injunction was upheld on appeal.
The court's lead opinion, by Chief Justice Ronald George, said the jury had already found Lawrence's and Avis' conduct illegal - and the injunction "simply precluded (them) from continuing their unlawful activity."
Avis lawyer Donna Rutter declined comment on the ruling. The company could appeal to a federal court.
The case has divided free-speech advocates.
"The First Amendment is not a license to discriminate," said American Civil Liberties Union lawyer Michelle Alexander. "Employees have a right to work in an environment free from discrimination, ridicule and insult."
However, Bruce Adelstein, who filed arguments on behalf of the Libertarian Law Council and other groups, said that while speech can cause harm "it is more dangerous for the government to ban it."