diff --git a/app/assets/javascripts/users_select.js.coffee b/app/assets/javascripts/users_select.js.coffee
index bf551430999a28dc1a75b25e0f9fbfba2b76739f..1c5a0dc108f6d466a0cdc38d0586f95a783200c1 100644
--- a/app/assets/javascripts/users_select.js.coffee
+++ b/app/assets/javascripts/users_select.js.coffee
@@ -142,8 +142,8 @@ class @UsersSelect
         selectable: true
         fieldName: $dropdown.data('field-name')
 
-        toggleLabel: (selected, el, e, added) ->
-          if selected and 'id' of selected and added
+        toggleLabel: (selected, el, e) ->
+          if selected and 'id' of selected and $(el).hasClass('is-active')
             if selected.text then selected.text else selected.name
           else
             defaultLabel
diff --git a/app/views/shared/issuable/_label_dropdown.html.haml b/app/views/shared/issuable/_label_dropdown.html.haml
index dc8f09b09c8316e208ff2246029f61cda7e9c7b0..b52fa6fa8c2dcde80d9be36d56e7538dbce8b1e3 100644
--- a/app/views/shared/issuable/_label_dropdown.html.haml
+++ b/app/views/shared/issuable/_label_dropdown.html.haml
@@ -26,7 +26,7 @@
 .dropdown
   %button.dropdown-menu-toggle.js-label-select.js-multiselect{class: classes.join(' '), type: "button", data: dropdown_data}
     %span.dropdown-toggle-text{ class: ("is-default" if selected.nil? || selected.to_a.size == 0) }
-      = h(multi_label_name(selected.to_a, h(selected_toggle.to_a[0]), "Label"))
+      = h(multi_label_name(selected.to_a, h(selected_toggle.to_a[0]), "Labels"))
     = icon('chevron-down')
   .dropdown-menu.dropdown-select.dropdown-menu-paging.dropdown-menu-labels.dropdown-menu-selectable
     = render partial: "shared/issuable/label_page_default", locals: { title: "Filter by label", show_footer: show_footer, show_create: show_create }
diff --git a/spec/features/issues/form_spec.rb b/spec/features/issues/form_spec.rb
new file mode 100644
index 0000000000000000000000000000000000000000..6c14dff6a3731c71b3ec24376e8d907bb802911e
--- /dev/null
+++ b/spec/features/issues/form_spec.rb
@@ -0,0 +1,85 @@
+require 'rails_helper'
+
+describe 'New/edit issue', feature: true, js: true do
+  let!(:project)   { create(:project) }
+  let!(:user)      { create(:user)}
+  let!(:milestone) { create(:milestone, project: project) }
+  let!(:label)     { create(:label, project: project) }
+  let!(:label2)    { create(:label, project: project) }
+  let!(:issue)     { create(:issue, project: project, assignee: user, milestone: milestone) }
+
+  before do
+    project.team << [user, :master]
+    login_as(user)
+  end
+
+  context 'new issue' do
+    before do
+      visit new_namespace_project_issue_path(project.namespace, project)
+    end
+
+    it 'should allow user to create new issue' do
+      fill_in 'issue_title', with: 'title'
+      fill_in 'issue_description', with: 'title'
+
+      click_button 'Assignee'
+      click_link user.name
+
+      page.find '.js-assignee-search' do
+        expect(page).to have_content user.name
+      end
+
+      click_button 'Milestone'
+      click_link milestone.title
+
+      page.find '.js-milestone-select' do
+        expect(page).to have_content milestone.title
+      end
+
+      click_button 'Labels'
+      click_link label.title
+      click_link label2.title
+
+      page.find '.js-label-select' do
+        expect(page).to have_content label2.title
+      end
+
+      click_button 'Submit issue'
+
+      page.find '.issuable-sidebar' do
+        expect(page).to have_content user.name
+        expect(page).to have_content milestone.title
+        expect(page).to have_content label.title
+        expect(page).to have_content label2.title
+      end
+    end
+  end
+
+  context 'edit issue' do
+    before do
+      visit edit_namespace_project_issue_path(project.namespace, project, issue)
+    end
+
+    it 'should allow user to update issue' do
+      expect(page).to have_content user.name
+      expect(page).to have_content milestone.title
+
+      click_button 'Labels'
+      click_link label.title
+      click_link label2.title
+
+      page.find '.js-label-select' do
+        expect(page).to have_content label2.title
+      end
+
+      click_button 'Save changes'
+
+      page.find '.issuable-sidebar' do
+        expect(page).to have_content user.name
+        expect(page).to have_content milestone.title
+        expect(page).to have_content label.title
+        expect(page).to have_content label2.title
+      end
+    end
+  end
+end