If you hover over the greyed out option, it does tell you that your symbology needs to be set to Unique Values, Graduated Colors, or Graduated Symbols so that it has distinct classes to apply to, and also that your symbology needs to be based on a field, not an expression. This is because the label class definition needs to convert cleanly to SQL, which won't work off an expression.
My first suggestion would be to check out your symbology, and if possible, adjust it to directly reference fields rather than an expression. The Create Labels from Symbology tool will still work if your symbology is based on multiple fields.
If that doesn't work, you're in for a lot of clicking, or possibly some Python. While you can copy a single label class's properties, you can't copy the class itself, so you need an existing label class to paste the properties into. Such a workflow would look like:
- Right-click label class in source layer and click "copy"
- Create a new label class in destination layer
- Right-click the new label class and click "paste", select "all properties"
- Groan inwardly and repeat for every single label class

It's not a great method, but if you really can't set label classes from symbology, it could work.
It's also worth noting that the GP tool Apply Symbology from Layer does pick up label classes, not just symbols. But of course, it will change the symbology, which maybe you don't want to do. You could save your symbology to styles, run the tool to import the label classes, then re-set the symbols to the styles afterward. But again, tedious and indirect. I'd check out your symbology settings first.
- Josh Carlson
Kendall County GIS