diff --git a/internal/controller/telemetry/collector_controller.go b/internal/controller/telemetry/collector_controller.go
index 4c0db1c5..593a3ce5 100644
--- a/internal/controller/telemetry/collector_controller.go
+++ b/internal/controller/telemetry/collector_controller.go
@@ -165,7 +165,7 @@ func (r *CollectorReconciler) Reconcile(ctx context.Context, req ctrl.Request) (
 
 	collector.Status.Tenants = tenantNames
 
-	if reflect.DeepEqual(*originalCollectorStatus, collector.Status) {
+	if !reflect.DeepEqual(*originalCollectorStatus, collector.Status) {
 		logger.Info("updating collector status")
 		err = r.Status().Update(ctx, collector)
 		if err != nil {
diff --git a/internal/controller/telemetry/otel_col_conf_test_fixtures/complex.yaml b/internal/controller/telemetry/otel_col_conf_test_fixtures/complex.yaml
index 1505761b..a683f8ce 100644
--- a/internal/controller/telemetry/otel_col_conf_test_fixtures/complex.yaml
+++ b/internal/controller/telemetry/otel_col_conf_test_fixtures/complex.yaml
@@ -85,6 +85,10 @@ processors:
     k8sattributes:
         auth_type: serviceAccount
         extract:
+            labels:
+                - from: pod
+                  key_regex: .*
+                  tag_name: all_labels
             metadata:
                 - k8s.pod.name
                 - k8s.pod.uid
diff --git a/internal/controller/telemetry/otel_conf_gen.go b/internal/controller/telemetry/otel_conf_gen.go
index 29c472f2..db6bac69 100644
--- a/internal/controller/telemetry/otel_conf_gen.go
+++ b/internal/controller/telemetry/otel_conf_gen.go
@@ -346,11 +346,20 @@ func (cfgInput *OtelColConfigInput) generateDefaultKubernetesProcessor() map[str
 		"k8s.pod.start_time",
 	}
 
+	var defaultLabels = []map[string]string{
+		{
+			"from":      "pod",
+			"tag_name":  "all_labels",
+			"key_regex": ".*",
+		},
+	}
+
 	k8sProcessor := map[string]any{
 		"auth_type":   "serviceAccount",
 		"passthrough": false,
 		"extract": map[string]any{
 			"metadata": defaultMetadata,
+			"labels":   defaultLabels,
 		},
 		"pod_association": defaultPodAssociation,
 	}
diff --git a/internal/controller/telemetry/otel_conf_gen_test.go b/internal/controller/telemetry/otel_conf_gen_test.go
index d66f58d0..16beca52 100644
--- a/internal/controller/telemetry/otel_conf_gen_test.go
+++ b/internal/controller/telemetry/otel_conf_gen_test.go
@@ -142,14 +142,10 @@ func TestOtelColConfComplex(t *testing.T) {
 	generatedIR := inputCfg.ToIntermediateRepresentation()
 
 	// Final YAML
-	generatedYAML, err := generatedIR.ToYAML()
+	_, err := generatedIR.ToYAML()
 	if err != nil {
 		t.Fatalf("YAML formatting failed, err=%v", err)
 	}
-	t.Logf(`the generated YAML is:
----
-%v
----`, generatedYAML)
 
 	actualYAMLBytes, err := generatedIR.ToYAMLRepresentation()
 	if err != nil {