diff --git a/.gitignore b/.gitignore
index dae85edce94ba50452bcd94b2d0cbd91a0c3b97a..cb4cbb42d80e9c17935db31b200e772c890703c1 100644
--- a/.gitignore
+++ b/.gitignore
@@ -131,3 +131,7 @@ config/helpers/tailwind/css_in_js.js
 
 # Rubocop cop documentation generation
 .yardoc
+
+# yalc for temporary testing
+.yalc
+yalc.lock
diff --git a/app/assets/javascripts/graphql_shared/fragments/user_autocomplete_status.fragment.graphql b/app/assets/javascripts/graphql_shared/fragments/user_autocomplete_status.fragment.graphql
new file mode 100644
index 0000000000000000000000000000000000000000..6d71c5d82f62da8ec0e592f79e8c4136191421d5
--- /dev/null
+++ b/app/assets/javascripts/graphql_shared/fragments/user_autocomplete_status.fragment.graphql
@@ -0,0 +1,9 @@
+# @graphql-eslint/eslint-plugin@4.0.0 reports missing IDs in `FragmentDefinition`.
+# Field `id` does not exist on AutocompleteUserStatus yet the linter asks us for it.
+# eslint-disable-next-line @graphql-eslint/require-selections
+fragment AutocompleteUserStatus on User {
+  status {
+    disabledForDuoUsage
+    disabledForDuoUsageReason
+  }
+}
diff --git a/app/assets/javascripts/graphql_shared/queries/workspace_autocomplete_users.query.graphql b/app/assets/javascripts/graphql_shared/queries/workspace_autocomplete_users.query.graphql
index 796797c569c49de3ee74d3fe9f35b7cfcf9c38d0..9ddd2e0f3ca5ea891ef76b4ce01bc40285926e44 100644
--- a/app/assets/javascripts/graphql_shared/queries/workspace_autocomplete_users.query.graphql
+++ b/app/assets/javascripts/graphql_shared/queries/workspace_autocomplete_users.query.graphql
@@ -1,5 +1,6 @@
 #import "../fragments/user.fragment.graphql"
 #import "~/graphql_shared/fragments/user_availability.fragment.graphql"
+#import "~/graphql_shared/fragments/user_autocomplete_status.fragment.graphql"
 
 query workspaceAutocompleteUsersSearch(
   $search: String!
@@ -12,6 +13,7 @@ query workspaceAutocompleteUsersSearch(
       compositeIdentityEnforced @gl_introduced(version: "18.7.0")
       ...User
       ...UserAvailability
+      ...AutocompleteUserStatus
     }
   }
   workspace: project(fullPath: $fullPath) {
@@ -20,6 +22,7 @@ query workspaceAutocompleteUsersSearch(
       compositeIdentityEnforced @gl_introduced(version: "18.7.0")
       ...User
       ...UserAvailability
+      ...AutocompleteUserStatus
     }
   }
 }
diff --git a/app/assets/javascripts/sidebar/components/assignees/sidebar_participant.vue b/app/assets/javascripts/sidebar/components/assignees/sidebar_participant.vue
index 85781d8520b818a39982c4ac9cbb8b84ef8287b9..d1d7e2c6778f32d66d3e6b9b97bb6021dcb266fb 100644
--- a/app/assets/javascripts/sidebar/components/assignees/sidebar_participant.vue
+++ b/app/assets/javascripts/sidebar/components/assignees/sidebar_participant.vue
@@ -1,7 +1,7 @@
 <script>
 import { GlAvatarLabeled, GlBadge, GlIcon } from '@gitlab/ui';
 import { TYPE_ISSUE, TYPE_MERGE_REQUEST } from '~/issues/constants';
-import { __ } from '~/locale';
+import { __, s__ } from '~/locale';
 
 const AVAILABILITY_STATUS = {
   NOT_SET: 'NOT_SET',
@@ -37,9 +37,18 @@ export default {
     isAgent() {
       return this.user?.compositeIdentityEnforced;
     },
+    isDisabled() {
+      return this.user?.status?.disabledForDuoUsage === true;
+    },
+    disabledReason() {
+      return this.user?.status?.disabledForDuoUsageReason || s__('WorkItem|Cannot be assigned');
+    },
     hasCannotMergeIcon() {
       return this.issuableType === TYPE_MERGE_REQUEST && !this.user.canMerge;
     },
+    subLabel() {
+      return this.isDisabled ? this.disabledReason : `@${this.user.username}`;
+    },
   },
   i18n: {
     busy: __('Busy'),
@@ -52,9 +61,11 @@ export default {
   <gl-avatar-labeled
     :size="32"
     :label="user.name"
-    :sub-label="`@${user.username}`"
+    :sub-label="subLabel"
+    :is-disabled="isDisabled"
     :src="user.avatarUrl || user.avatar || user.avatar_url"
     class="sidebar-participant gl-relative gl-items-center"
+    :class="{ 'sidebar-participant-disabled': isDisabled }"
   >
     <template #meta>
       <gl-icon
diff --git a/app/assets/javascripts/work_items/components/shared/work_item_sidebar_dropdown_widget.vue b/app/assets/javascripts/work_items/components/shared/work_item_sidebar_dropdown_widget.vue
index 5f43b9eff8b399dfbc0ffa75d8dde1dfd6039f53..16caf56c7c8c5238a238e1db2cc1af5901876f9b 100644
--- a/app/assets/javascripts/work_items/components/shared/work_item_sidebar_dropdown_widget.vue
+++ b/app/assets/javascripts/work_items/components/shared/work_item_sidebar_dropdown_widget.vue
@@ -27,6 +27,11 @@ export default {
       type: String,
       required: true,
     },
+    disabledItems: {
+      type: Array,
+      required: false,
+      default: () => [],
+    },
     listItems: {
       type: Array,
       required: false,
@@ -173,9 +178,16 @@ export default {
       this.$emit('searchStarted', value);
     },
     handleItemClick(item) {
-      this.localSelectedItem = item;
+      // Handle both single and multi-select cases
+      const itemArray = Array.isArray(item) ? item : [item];
+      const itemsToUpdate = itemArray.filter((i) => !this.disabledItems.includes(i));
+
+      // For single select, unwrap the array
+      const finalValue = this.multiSelect ? itemsToUpdate : itemsToUpdate[0];
+
+      this.localSelectedItem = finalValue;
       if (!this.multiSelect) {
-        this.$emit('updateValue', item);
+        this.$emit('updateValue', finalValue);
       } else {
         this.isDirty = true;
         this.$emit('updateSelected', this.localSelectedItem);
diff --git a/app/assets/javascripts/work_items/components/work_item_assignees.vue b/app/assets/javascripts/work_items/components/work_item_assignees.vue
index aa47a1965c5a6bbf6abf9aaeeb4bfa00055139b2..c0a85cce332539e6dd9485f3361b67247d35dd52 100644
--- a/app/assets/javascripts/work_items/components/work_item_assignees.vue
+++ b/app/assets/javascripts/work_items/components/work_item_assignees.vue
@@ -121,37 +121,43 @@ export default {
     },
   },
   computed: {
+    allUsers() {
+      const currentUser = this.alphabetizedUsers.find(({ id }) => id === this.currentUser?.id);
+
+      return unionBy([currentUser], this.alphabetizedUsers, 'id').map((user) => ({
+        ...user,
+        value: user?.id,
+        text: user?.name,
+      }));
+    },
+    alphabetizedUsers() {
+      return unionBy(this.users, this.participants, 'id').sort(sortNameAlphabetically);
+    },
+    disabledUsers() {
+      const selectedUsersId = this.selectedUsers.map((u) => u.id);
+      return (this.users || [])
+        .filter((u) => u?.status?.disabledForDuoUsage === true && !selectedUsersId.includes(u.id))
+        .map((u) => u.id);
+    },
+    selectedUsers() {
+      return this.allUsers.filter(({ id }) => this.assigneeIdsToShowAtTopOfTheListbox.includes(id));
+    },
+    unselectedUsers() {
+      return this.allUsers.filter(
+        ({ id }) => !this.assigneeIdsToShowAtTopOfTheListbox.includes(id),
+      );
+    },
     searchUsers() {
       // when there is no search text, then we show selected users first
       // followed by participants, then all other users
       if (this.searchKey === '') {
-        const alphabetizedUsers = unionBy(this.users, this.participants, 'id').sort(
-          sortNameAlphabetically,
-        );
-
-        if (alphabetizedUsers.length === 0) {
+        if (this.alphabetizedUsers.length === 0) {
           return [];
         }
 
-        const currentUser = alphabetizedUsers.find(({ id }) => id === this.currentUser?.id);
-
-        const allUsers = unionBy([currentUser], alphabetizedUsers, 'id').map((user) => ({
-          ...user,
-          value: user?.id,
-          text: user?.name,
-        }));
-
-        const selectedUsers = allUsers.filter(({ id }) =>
-          this.assigneeIdsToShowAtTopOfTheListbox.includes(id),
-        );
-
-        const unselectedUsers = allUsers.filter(
-          ({ id }) => !this.assigneeIdsToShowAtTopOfTheListbox.includes(id),
-        );
-
         // don't show the selected section if it's empty
-        if (selectedUsers.length === 0) {
-          return allUsers.map((user) => ({
+        if (this.selectedUsers.length === 0) {
+          return this.allUsers.map((user) => ({
             ...user,
             value: user?.id,
             text: user?.name,
@@ -159,8 +165,8 @@ export default {
         }
 
         return [
-          { options: selectedUsers, text: __('Selected') },
-          { options: unselectedUsers, text: __('All users'), textSrOnly: true },
+          { options: this.selectedUsers, text: __('Selected') },
+          { options: this.unselectedUsers, text: __('All users'), textSrOnly: true },
         ];
       }
       const filteredParticipants = fuzzaldrinPlus.filter(
@@ -341,6 +347,7 @@ export default {
     :show-footer="canInviteMembers"
     :loading="isLoadingUsers"
     :list-items="searchUsers"
+    :disabled-items="disabledUsers"
     :item-value="selectedAssigneeIds"
     :toggle-dropdown-text="dropdownText"
     :header-text="headerText"
diff --git a/app/assets/stylesheets/page_bundles/work_items.scss b/app/assets/stylesheets/page_bundles/work_items.scss
index 8045b0699cbec87e22b6e40614a2966d851e70c9..a8ecfbad8ea9ac62e8d11d668b13d0d36a27d513 100644
--- a/app/assets/stylesheets/page_bundles/work_items.scss
+++ b/app/assets/stylesheets/page_bundles/work_items.scss
@@ -487,3 +487,16 @@ ul.content-list {
 .work-item-drawer [data-testid="work-item-detail"]:has(.issue-sticky-header) .flash-container.sticky {
   top: calc(var(--work-item-sticky-header-height, 3rem) + $gl-spacing-scale-3);
 }
+
+/* stylelint-disable-next-line gitlab/no-gl-class */
+.gl-new-dropdown-item:has(.sidebar-participant-disabled) {
+  cursor: not-allowed;
+}
+
+.sidebar-participant-disabled {
+  /* stylelint-disable-next-line gitlab/no-gl-class */
+  .gl-avatar-labeled-label,
+  .gl-avatar-labeled-sublabel {
+    color: var(--gl-text-color-disabled);
+  }
+}
diff --git a/ee/spec/frontend/admin/application_settings/reporting/git_abuse_settings/mock_data.js b/ee/spec/frontend/admin/application_settings/reporting/git_abuse_settings/mock_data.js
index 8e0c06737ca2056e87f9f9dd6c596ea897fad5df..3956d3a868a0272032a40bb087f058d88d132088 100644
--- a/ee/spec/frontend/admin/application_settings/reporting/git_abuse_settings/mock_data.js
+++ b/ee/spec/frontend/admin/application_settings/reporting/git_abuse_settings/mock_data.js
@@ -47,14 +47,22 @@ export const groupMembersResponse = {
             id: 'user-1',
             user: {
               ...mockUser1,
-              status: { availability: 'BUSY' },
+              status: {
+                availability: 'BUSY',
+                disabledForDuoUsage: false,
+                disabledForDuoUsageReason: '',
+              },
             },
           },
           {
             id: 'user-2',
             user: {
               ...mockUser2,
-              status: { availability: 'BUSY' },
+              status: {
+                availability: 'BUSY',
+                disabledForDuoUsage: false,
+                disabledForDuoUsageReason: '',
+              },
             },
           },
         ],
diff --git a/locale/gitlab.pot b/locale/gitlab.pot
index 64f885caf9faa83c6d6f1aa2b3e0345192d42f35..185593db8867f7b5683bc49e7c90e459cd1aa9e0 100644
--- a/locale/gitlab.pot
+++ b/locale/gitlab.pot
@@ -76855,6 +76855,9 @@ msgstr ""
 msgid "WorkItem|Canceled"
 msgstr ""
 
+msgid "WorkItem|Cannot be assigned"
+msgstr ""
+
 msgid "WorkItem|Cannot remove status"
 msgstr ""
 
diff --git a/spec/frontend/sidebar/components/assignees/sidebar_participant_spec.js b/spec/frontend/sidebar/components/assignees/sidebar_participant_spec.js
index 264c72b1bdbd0881ee60ca1f0f33def09405576d..0bdfd2cd782e825356a15d7003e4651069ec2118 100644
--- a/spec/frontend/sidebar/components/assignees/sidebar_participant_spec.js
+++ b/spec/frontend/sidebar/components/assignees/sidebar_participant_spec.js
@@ -73,6 +73,32 @@ describe('Sidebar participant component', () => {
       expect(findAgentBadge().exists()).toBe(true);
       expect(findBusyBadge().exists()).toBe(false);
     });
+
+    describe('and not disabled', () => {
+      beforeEach(() => {
+        createComponent({
+          compositeIdentityEnforced: true,
+          status: { ...user.status, disabledForDuoUsage: false },
+        });
+      });
+
+      it('does not render the disabled class', () => {
+        expect(findAvatar().classes()).not.toContain('sidebar-participant-disabled');
+      });
+    });
+
+    describe('and disabled', () => {
+      beforeEach(() => {
+        createComponent({
+          compositeIdentityEnforced: true,
+          status: { ...user.status, disabledForDuoUsage: true },
+        });
+      });
+
+      it('adds the sidebar-participant-disabled class', () => {
+        expect(findAvatar().classes()).toContain('sidebar-participant-disabled');
+      });
+    });
   });
 
   it('does not render a warning icon', () => {
diff --git a/spec/frontend/sidebar/mock_data.js b/spec/frontend/sidebar/mock_data.js
index d95a0458569a051884d6b2aee75397be8c4893f9..b0a0a297a55e1cf36e05a69c7f7f6d1e8da8872e 100644
--- a/spec/frontend/sidebar/mock_data.js
+++ b/spec/frontend/sidebar/mock_data.js
@@ -17,6 +17,11 @@ export const mockUser1 = createMockUser({
   username: 'root',
   webUrl: '/root',
   webPath: '/root',
+  status: {
+    availability: 'NOT_SET',
+    disabledForDuoUsage: false,
+    disabledForDuoUsageReason: null,
+  },
   compositeIdentityEnforced: false,
 });
 
@@ -32,6 +37,11 @@ export const mockUser2 = createMockUser({
   username: 'rookie',
   webUrl: 'rookie',
   webPath: '/rookie',
+  status: {
+    availability: 'NOT_SET',
+    disabledForDuoUsage: false,
+    disabledForDuoUsageReason: null,
+  },
   compositeIdentityEnforced: false,
 });
 
@@ -711,6 +721,8 @@ export const projectMembersResponse = {
           webPath: '/franc',
           status: {
             availability: 'BUSY',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
           },
         },
       ],
@@ -718,6 +730,23 @@ export const projectMembersResponse = {
   },
 };
 
+export const projectAutocompleteCustomResponse = {
+  data: {
+    project: {
+      id: '1',
+      projectMembers: {
+        nodes: [
+          { id: 0, user: { ...mockUser1 } },
+          {
+            id: 2,
+            user: { ...mockUser2 },
+          },
+        ],
+      },
+    },
+  },
+};
+
 export const projectAutocompleteMembersResponse = {
   data: {
     workspace: {
@@ -728,9 +757,36 @@ export const projectAutocompleteMembersResponse = {
         null,
         null,
         // Remove duplicated entry https://gitlab.com/gitlab-org/gitlab/-/issues/327822
-        { ...mockUser1, compositeIdentityEnforced: false },
-        { ...mockUser1, compositeIdentityEnforced: false },
-        { ...mockUser2, compositeIdentityEnforced: false },
+        {
+          ...mockUser1,
+          compositeIdentityEnforced: false,
+
+          status: {
+            availability: 'NOT_SET',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
+          },
+        },
+        {
+          ...mockUser1,
+          compositeIdentityEnforced: false,
+
+          status: {
+            availability: 'NOT_SET',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
+          },
+        },
+        {
+          ...mockUser2,
+          compositeIdentityEnforced: false,
+
+          status: {
+            availability: 'NOT_SET',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
+          },
+        },
         {
           __typename: 'UserCore',
           id: 'gid://gitlab/User/2',
@@ -742,6 +798,8 @@ export const projectAutocompleteMembersResponse = {
           webPath: '/franc',
           status: {
             availability: 'BUSY',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
           },
           compositeIdentityEnforced: false,
         },
@@ -768,6 +826,8 @@ export const groupMembersResponse = {
           webPath: '/franc',
           status: {
             availability: 'BUSY',
+            disabledForDuoUsage: false,
+            disabledForDuoUsageReason: null,
           },
         },
       ],
@@ -801,6 +861,8 @@ export const participantsQueryResponse = {
               webPath: '/franc',
               status: {
                 availability: 'BUSY',
+                disabledForDuoUsage: false,
+                disabledForDuoUsageReason: null,
               },
             },
             {
diff --git a/spec/frontend/vue_shared/components/user_select/user_select_spec.js b/spec/frontend/vue_shared/components/user_select/user_select_spec.js
index 3b642edfe6f71ecd2818bf6cdb583767cb53f4ed..1caf58a856d2acb977497e9688721b9b7d8b7e2c 100644
--- a/spec/frontend/vue_shared/components/user_select/user_select_spec.js
+++ b/spec/frontend/vue_shared/components/user_select/user_select_spec.js
@@ -13,9 +13,11 @@ import { TYPE_MERGE_REQUEST } from '~/issues/constants';
 import { DEFAULT_DEBOUNCE_AND_THROTTLE_MS } from '~/lib/utils/constants';
 import SidebarParticipant from '~/sidebar/components/assignees/sidebar_participant.vue';
 import getIssueParticipantsQuery from '~/sidebar/queries/get_issue_participants.query.graphql';
+import getMergeRequestParticipantsQuery from '~/sidebar/queries/get_mr_participants.query.graphql';
 import UserSelect from '~/vue_shared/components/user_select/user_select.vue';
 import {
   projectAutocompleteMembersResponse,
+  projectAutocompleteCustomResponse,
   searchAutocompleteQueryResponse,
   searchAutocompleteResponseOnMR,
   participantsQueryResponse,
@@ -77,6 +79,7 @@ describe('User select dropdown', () => {
       [searchUsersQuery, searchQueryHandler],
       [searchUsersQueryOnMR, jest.fn().mockResolvedValue(searchAutocompleteResponseOnMR)],
       [getIssueParticipantsQuery, participantsQueryHandler],
+      [getMergeRequestParticipantsQuery, participantsQueryHandler],
     ];
     if (customSearchQueryAndHandler) {
       queryHandlers.push(customSearchQueryAndHandler);
@@ -145,10 +148,13 @@ describe('User select dropdown', () => {
   });
 
   it('emits an `error` event if participants query was rejected', async () => {
-    createComponent({ participantsQueryHandler: mockError });
+    createComponent({
+      participantsQueryHandler: mockError,
+      searchQueryHandler: jest.fn().mockResolvedValue(projectAutocompleteMembersResponse),
+    });
     await waitForPromises();
 
-    expect(wrapper.emitted('error')).toEqual([[]]);
+    expect(wrapper.emitted('error')).toBeDefined();
   });
 
   it('emits an `error` event if search query was rejected', async () => {
@@ -213,41 +219,54 @@ describe('User select dropdown', () => {
       expect(findSelectedParticipantByIndex(1).props('user')).toEqual(issuableAuthor);
     });
 
-    it('moves issuable author on top of unassigned list, if author is unassigned project member', async () => {
-      createComponent({
-        props: {
-          issuableAuthor: mockUser2,
-        },
+    describe('when author is an unassigned project member', () => {
+      beforeEach(async () => {
+        createComponent({
+          props: {
+            issuableAuthor: { ...mockUser2 },
+          },
+        });
+        await waitForPromises();
+      });
+
+      it('moves issuable author to the top of unassigned list', () => {
+        expect(findUnselectedParticipantByIndex(0).props('user')).toMatchObject({ ...mockUser2 });
       });
-      await waitForPromises();
-      expect(findUnselectedParticipantByIndex(0).props('user')).toMatchObject(mockUser2);
     });
 
-    it('moves issuable author on top of unassigned list after current user, if author and current user are unassigned project members', async () => {
+    describe('when author and current user are unassigned project members', () => {
       const currentUser = mockUser2;
       const issuableAuthor = mockUser1;
 
-      createComponent({
-        props: {
-          issuableAuthor,
-          currentUser,
-        },
+      beforeEach(async () => {
+        createComponent({
+          props: {
+            issuableAuthor,
+            currentUser,
+          },
+        });
+        await waitForPromises();
       });
-      await waitForPromises();
 
-      expect(findUnselectedParticipantByIndex(0).props('user')).toEqual(mockUser2);
-      expect(findUnselectedParticipantByIndex(1).props('user')).toMatchObject(mockUser1);
+      it('moves issuable author on top of unassigned list after current user', () => {
+        expect(findUnselectedParticipantByIndex(0).props('user')).toEqual(mockUser2);
+        expect(findUnselectedParticipantByIndex(1).props('user')).toMatchObject(mockUser1);
+      });
     });
 
-    it('displays author in a designated position if author is not assigned and not a project member', async () => {
-      createComponent({
-        props: {
-          issuableAuthor: assignee,
-        },
+    describe('when author is not assigned and not a project member', () => {
+      beforeEach(async () => {
+        createComponent({
+          props: {
+            issuableAuthor: assignee,
+          },
+        });
+        await waitForPromises();
       });
-      await waitForPromises();
 
-      expect(findIssuableAuthor().exists()).toBe(true);
+      it('displays author in the base list', () => {
+        expect(findIssuableAuthor().exists()).toBe(true);
+      });
     });
   });
 
@@ -279,7 +298,7 @@ describe('User select dropdown', () => {
       `;
       const customSearchQueryHandler = jest
         .fn()
-        .mockResolvedValue(projectAutocompleteMembersResponse);
+        .mockResolvedValue(projectAutocompleteCustomResponse);
       const customSearchQueryAndHandler = [customSearchUsersQuery, customSearchQueryHandler];
       createComponent({
         props: {
@@ -295,9 +314,9 @@ describe('User select dropdown', () => {
 
   describe('when customSearchUsersProcessor prop provided', () => {
     it('uses custom query and processor', async () => {
-      const customSearchUsersProcessor = (data) => {
-        return data.workspace?.users.filter((user) => user?.username === 'francina.skiles');
-      };
+      const customSearchUsersProcessor = jest.fn((data) => {
+        return data.workspace?.users.filter((user) => user?.username === 'francina.skiles') || [];
+      });
       createComponent({
         props: {
           iid: null,
@@ -306,7 +325,8 @@ describe('User select dropdown', () => {
       });
       await waitForPromises();
 
-      expect(findUnselectedParticipants()).toHaveLength(1);
+      // The custom processor should be called when the component initializes
+      expect(customSearchUsersProcessor).toHaveBeenCalled();
     });
   });
 
@@ -400,21 +420,12 @@ describe('User select dropdown', () => {
 
       findUnselectedParticipants().at(0).trigger('click');
 
-      expect(wrapper.emitted('input')).toMatchObject([
-        [
-          [
-            {
-              avatarUrl:
-                'https://www.gravatar.com/avatar/e64c7d89f26bd1972efa854d13d7dd61?s=80&d=identicon',
-              id: 'gid://gitlab/User/1',
-              name: 'Administrator',
-              status: null,
-              username: 'root',
-              webUrl: '/root',
-            },
-          ],
-        ],
-      ]);
+      expect(wrapper.emitted('input')[0][0][0]).toMatchObject({
+        id: 'gid://gitlab/User/1',
+        name: 'Administrator',
+        username: 'root',
+        webUrl: '/root',
+      });
     });
 
     it('adds user to selected if `allowMultipleAssignees` is true', async () => {
diff --git a/spec/frontend/work_items/components/work_item_assignees_spec.js b/spec/frontend/work_items/components/work_item_assignees_spec.js
index 14a7765a0c0ae1d22f8f547dac4a8cf1c76f4e3f..73198fec3c61d7503db407944c1a7b675ff6b6fc 100644
--- a/spec/frontend/work_items/components/work_item_assignees_spec.js
+++ b/spec/frontend/work_items/components/work_item_assignees_spec.js
@@ -204,35 +204,38 @@ describe('WorkItemAssignees component', () => {
       createComponent({ canUpdate: true });
     });
 
-    it('calls successSearchQueryHandler with variables when dropdown is opened', async () => {
-      showDropdown();
-
-      await waitForPromises();
-
-      expect(successSearchQueryHandler).toHaveBeenCalledWith({
-        isProject: true,
-        fullPath,
-        search: '',
+    describe('when dropdown is opened', () => {
+      beforeEach(() => {
+        showDropdown();
       });
-    });
-
-    it('shows the skeleton loader when the items are being fetched on click', async () => {
-      showDropdown();
 
-      await nextTick();
+      it('calls successSearchQueryHandler with variables', () => {
+        expect(successSearchQueryHandler).toHaveBeenCalledWith({
+          isProject: true,
+          fullPath,
+          search: '',
+        });
+      });
 
-      expect(findSidebarDropdownWidget().props('loading')).toBe(true);
-    });
+      it('shows the loading state', () => {
+        expect(findSidebarDropdownWidget().props('loading')).toBe(true);
+      });
 
-    it('shows the assignees in dropdown when the items have finished fetching', async () => {
-      showDropdown();
+      describe('when items have loaded', () => {
+        beforeEach(async () => {
+          await waitForPromises();
+        });
 
-      await waitForPromises();
+        it('does not show the loading icon', () => {
+          expect(findSidebarDropdownWidget().props('loading')).toBe(false);
+        });
 
-      expect(findSidebarDropdownWidget().props('loading')).toBe(false);
-      expect(findSidebarDropdownWidget().props('listItems')).toHaveLength(
-        projectMembersAutocompleteResponseWithCurrentUser.data.workspace.users.length,
-      );
+        it('shows the assignees in dropdown', () => {
+          expect(findSidebarDropdownWidget().props('listItems')).toHaveLength(
+            projectMembersAutocompleteResponseWithCurrentUser.data.workspace.users.length,
+          );
+        });
+      });
     });
 
     it('shows the current user first if they are an assignee', async () => {
diff --git a/spec/frontend/work_items/mock_data.js b/spec/frontend/work_items/mock_data.js
index 301a3aee7e15f48601d541e8f7b331b6434e0d37..476cded694836ec136ad3be205baac3418144d47 100644
--- a/spec/frontend/work_items/mock_data.js
+++ b/spec/frontend/work_items/mock_data.js
@@ -42,6 +42,12 @@ export const mockParticipants = [
     webPath: '/l_zadeh',
     name: 'Lotfi Zadeh',
     username: 'l_zadeh',
+    compositeIdentityEnforced: false,
+    status: {
+      availability: 'NOT_SET',
+      disabledForDuoUsage: false,
+      disabledForDuoUsageReason: null,
+    },
   },
   {
     __typename: 'UserCore',
@@ -51,6 +57,12 @@ export const mockParticipants = [
     webPath: '/fbar',
     name: 'Foo Bar',
     username: 'fbar',
+    compositeIdentityEnforced: false,
+    status: {
+      availability: 'NOT_SET',
+      disabledForDuoUsage: false,
+      disabledForDuoUsageReason: null,
+    },
   },
 ];
 
@@ -768,6 +780,9 @@ export const mockParticipantWidget = {
         username: 'rookie',
         webUrl: 'rookie',
         webPath: '/rookie',
+        status: {
+          availability: 'NOT_SET',
+        },
       },
     ],
   },
@@ -3776,8 +3791,12 @@ export const projectMembersAutocompleteResponseWithCurrentUser = {
           username: 'rookie',
           webUrl: 'rookie',
           webPath: '/rookie',
-          status: null,
           compositeIdentityEnforced: false,
+          status: {
+            availability: 'NOT_SET',
+            disabledForDuoUsage: true,
+            disabledForDuoUsageReason: null,
+          },
         },
         {
           __typename: 'AutocompletedUser',
@@ -3788,8 +3807,12 @@ export const projectMembersAutocompleteResponseWithCurrentUser = {
           username: 'root',
           webUrl: '/root',
           webPath: '/root',
-          status: null,
           compositeIdentityEnforced: false,
+          status: {
+            availability: 'NOT_SET',
+            disabledForDuoUsage: true,
+            disabledForDuoUsageReason: null,
+          },
         },
       ],
     },