Microsoft Secure Tech Accelerator
Apr 03 2024, 07:00 AM - 11:00 AM (PDT)
Microsoft Tech Community

Sensitivity labels grayed out in Microsoft365 Applications

Brass Contributor

What would cause the sensitivity label icon not to work in the Microsoft 365 Applications?  It works in all the web applications but not the locally installed.  This works for accounts from my test tenant, but not accounts in my production tenant.  I can't figure out what is different.  Thanks.

7 Replies
Hi, just a wild guess here. By default, built-in labeling is turned off when the Azure Information Protection client is installed.
Yeah that was the first thing we checked. When I log in with an account from a different tenant it works. So I was thinking it has to be something with this specific tenant. Thanks.
Would you mind adding what you've checked so far? Such as licensing, migrated labels etc. Those reading this have no idea of your environment/s so please be detailed.


So we have Office 365 E3 licensing. We are starting new in the Compliance console and did not migrate any labels. Although AIP was enabled in our tenant, we never used it. Our test tenant is at the same Office365 E3 licensing also we do have some M365 E3 in that tenant but the accounts we are testing with have O365 E3 applied. The test tenant never had AIP activated.  So i'm not sure if that could be impacting us or not.

Hello again, so sensitivity labels and the sensitivity button is showing correct in your production tenant when using Office on the web just not in the desktop suite, if not signing in with another account from another tenant on that particular computer?

The Office built-in labeling client downloads sensitivity labels and sensitivity label policy settings from the Microsoft 365 compliance center. To use the Office built-in labeling client, you must have one or more label policies published to users from the compliance center (and a supported version of Office).
If you notice under File -> Office Account -> User Information that the local domain user account is listed instead of the Microsoft 365 account, you'll need to switch accounts. Usually, during product activation, the Microsoft 365 account should be selected automatically, but sometimes it gets stuck on the local domain user account for some reason. Here's a quick fix:

Go to 'File' in your Office application.
Click on 'Office Account'.
Under 'User Information', if you see the local user account, choose 'Switch Account'.
Select or sign in with the Microsoft 365 account that should be associated with the product.

This is crucial because your Microsoft 365 subscription, along with all its features and syncing capabilities, is tied to the right account being active. If switching accounts doesn't do the trick, try signing out of all accounts in the Office suite and then log back in with your Microsoft 365 account.

Also, once you switch the account, check the activation status to make sure your Office products are properly activated with your Microsoft 365 account. This issue might pop up again, especially after updates, so keep these steps in mind for future reference.

Hope this helps!