diff --git a/awx/ui_next/src/components/MultiSelect/MultiSelect.jsx b/awx/ui_next/src/components/MultiSelect/MultiSelect.jsx
index ea5a701ccd..cb386b67b6 100644
--- a/awx/ui_next/src/components/MultiSelect/MultiSelect.jsx
+++ b/awx/ui_next/src/components/MultiSelect/MultiSelect.jsx
@@ -86,7 +86,7 @@ class MultiSelect extends Component {
         this.handleSelection(e, option);
       }
     } else {
-      this.setState({ isExpanded: false });
+      this.setState({ input: '', isExpanded: false });
     }
   }
 
@@ -105,17 +105,30 @@ class MultiSelect extends Component {
   handleAddItem(event) {
     const { input, chipItems } = this.state;
     const { onAddNewItem } = this.props;
-    const newChip = { name: input, id: Math.random() };
-    if (event.key !== 'Tab') {
+    const isIncluded = chipItems.some(chipItem => chipItem.name === input);
+
+    if (!input) {
       return;
     }
-    this.setState({
-      chipItems: chipItems.concat(newChip),
-      isExpanded: false,
-      input: '',
-    });
 
-    onAddNewItem(input);
+    if (isIncluded) {
+      // This event.preventDefault prevents the form from submitting
+      // if the user tries to create 2 chips of the same name
+      event.preventDefault();
+      this.setState({ input: '', isExpanded: false });
+      return;
+    }
+    if (event.key === 'Enter') {
+      event.preventDefault();
+      this.setState({
+        chipItems: chipItems.concat({ name: input, id: input }),
+        isExpanded: false,
+        input: '',
+      });
+      onAddNewItem(input);
+    } else if (event.key === 'Tab') {
+      this.setState({ input: '' });
+    }
   }
 
   handleInputChange(e) {
diff --git a/awx/ui_next/src/components/MultiSelect/MultiSelect.test.jsx b/awx/ui_next/src/components/MultiSelect/MultiSelect.test.jsx
index 422baacb84..66996fcdb7 100644
--- a/awx/ui_next/src/components/MultiSelect/MultiSelect.test.jsx
+++ b/awx/ui_next/src/components/MultiSelect/MultiSelect.test.jsx
@@ -40,10 +40,10 @@ describe('<MultiSelect />', () => {
     const component = wrapper.find('MultiSelect');
     component
       .find('input[aria-label="labels"]')
-      .simulate('keydown', { key: 'Tab' });
+      .simulate('keydown', { key: 'Enter' });
     component.update();
     await sleep(1);
-    expect(component.state().chipItems.length).toBe(3);
+    expect(component.state().chipItems.length).toBe(2);
   });
   test('handleAddItem adds a chip only when Tab is pressed', () => {
     const onAddNewItem = jest.fn();
@@ -57,7 +57,7 @@ describe('<MultiSelect />', () => {
     );
     const event = {
       preventDefault: () => {},
-      key: 'Tab',
+      key: 'Enter',
     };
     const component = wrapper.find('MultiSelect');
 
diff --git a/awx/ui_next/src/screens/Template/JobTemplateAdd/JobTemplateAdd.jsx b/awx/ui_next/src/screens/Template/JobTemplateAdd/JobTemplateAdd.jsx
index 5c738a942d..b3b4d12f92 100644
--- a/awx/ui_next/src/screens/Template/JobTemplateAdd/JobTemplateAdd.jsx
+++ b/awx/ui_next/src/screens/Template/JobTemplateAdd/JobTemplateAdd.jsx
@@ -14,21 +14,47 @@ import JobTemplateForm from '../shared/JobTemplateForm';
 import { JobTemplatesAPI } from '@api';
 
 function JobTemplateAdd({ history, i18n }) {
-  const [error, setError] = useState(null);
+  const [formSubmitError, setFormSubmitError] = useState(null);
 
-  const handleSubmit = async values => {
-    setError(null);
+  async function handleSubmit(values) {
+    const { newLabels, removedLabels } = values;
+    delete values.newLabels;
+    delete values.removedLabels;
+
+    setFormSubmitError(null);
     try {
-      const { data } = await JobTemplatesAPI.create(values);
-      history.push(`/templates/${data.type}/${data.id}/details`);
-    } catch (err) {
-      setError(err);
+      const {
+        data: { id, type },
+      } = await JobTemplatesAPI.create(values);
+      await Promise.all([submitLabels(id, newLabels, removedLabels)]);
+      history.push(`/templates/${type}/${id}/details`);
+    } catch (error) {
+      setFormSubmitError(error);
     }
-  };
+  }
 
-  const handleCancel = () => {
+  async function submitLabels(id, newLabels = [], removedLabels = []) {
+    const disassociationPromises = removedLabels.map(label =>
+      JobTemplatesAPI.disassociateLabel(id, label)
+    );
+    const associationPromises = newLabels
+      .filter(label => !label.organization)
+      .map(label => JobTemplatesAPI.associateLabel(id, label));
+    const creationPromises = newLabels
+      .filter(label => label.organization)
+      .map(label => JobTemplatesAPI.generateLabel(id, label));
+
+    const results = await Promise.all([
+      ...disassociationPromises,
+      ...associationPromises,
+      ...creationPromises,
+    ]);
+    return results;
+  }
+
+  function handleCancel() {
     history.push(`/templates`);
-  };
+  }
 
   return (
     <PageSection>
@@ -44,7 +70,7 @@ function JobTemplateAdd({ history, i18n }) {
             handleSubmit={handleSubmit}
           />
         </CardBody>
-        {error ? <div>error</div> : ''}
+        {formSubmitError ? <div>formSubmitError</div> : ''}
       </Card>
     </PageSection>
   );
diff --git a/awx/ui_next/src/screens/Template/shared/JobTemplateForm.test.jsx b/awx/ui_next/src/screens/Template/shared/JobTemplateForm.test.jsx
index d9be14e148..1d6a46adb2 100644
--- a/awx/ui_next/src/screens/Template/shared/JobTemplateForm.test.jsx
+++ b/awx/ui_next/src/screens/Template/shared/JobTemplateForm.test.jsx
@@ -158,7 +158,7 @@ describe('<JobTemplateForm />', () => {
       _JobTemplateForm.prototype,
       'handleNewLabel'
     );
-    const event = { key: 'Tab' };
+    const event = { key: 'Enter', preventDefault: () => {} };
     const wrapper = mountWithContexts(
       <JobTemplateForm
         template={mockData}