Hi @Jesse Tran ,
“Note: We are using Outlook on-prem, but are using the M365 compliance center to configure the labels and label policy.”
Please clarify what specific version of Outlook you are using. It's important to note the minimum Office application version required for sensitivity label capabilities.
More details please refer to: Minimum versions for sensitivity labels in Microsoft 365 Apps - Microsoft Purview (compliance) | Microsoft Learn
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