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The specs added with the observed-generation work asserted on end states only. Both the listener rebuild and a stalled reconcile pass through a transient phase, and nothing looked at it: the tests waited for the rebuilt listener and then checked for Running. Removing the pending update that guards the rebuild left them green, which was pointed out in review and is true — I checked by deleting that update and re-running, and they passed. The window was invisible because it closes on its own between two polls. Hold it open instead: the AutoscalingListener controller does not run in this suite, so a finalizer added by the test keeps the deleted listener around until the test removes it. That turns a race into a state the test can sit on and assert against. The label spec now waits for the listener to carry a deletion timestamp while the scale set reports Pending, holds that to show it is not a blip, then releases the finalizer and checks the listener comes back with a new UID and the scale set returns to Running. With the pending update removed it now fails on the phase, which is the point. The same trick gives the failure path its first coverage. A max runners change bumps the generation and forces a listener rebuild, so blocking the rebuild stalls the reconcile part way through. The new spec pins what the contract claims: the observed generation stays behind the live generation and the phase stays Pending for as long as the change cannot be applied, and the marker only catches up once it can. Also drops a stale comment that survived a merge and contradicted the code next to it, still claiming label edits no longer reach the Pending phase. Co-authored-by: Copilot App <223556219+Copilot@users.noreply.github.com>