Factory staff were "left in tears" after being told they could no longer speak Welsh at work, according to the Welsh Language Commissioner.
Aled Roberts said it had caused upset for some employees at Pullmaflex which employs 230 staff making car seats at Ammanford, Carmarthenshire.
Manager James Handyman told BBC Wales it had apologised when it realised the upset it had caused.
He said the "principal motivation" had been related to health and safety.
He claimed that the language "request" had been made because of concerns relating to Eastern European workers at the factory.
"It didn't occur to us it would create any offence to our Welsh speaking staff. When it became apparent, we issued an apology," Mr Handyman said.
'Caused upset and anger'
He explained management "encouraged people to speak English in the workplace", but added people were free to speak Welsh.
In his report, Mr Roberts found "the instruction caused upset and anger for staff members... and reduced some Welsh speakers to tears as the Welsh language had been spoken at the site for over 30 years.
"Some Polish speakers, who had used the language in their work for over three years, were equally upset."
Mr Roberts said the company had "interfered with the applicants' freedom to use the Welsh language, contrary to the Welsh Language Measure of 2011".
While there is no financial penalty for private companies, the commissioner has instructed the firm to adopt a number of recommendations, including stating in a policy document that it "will not interfere with individuals' freedom to use the Welsh language".