diff --git a/ui/src/components/IssueChatThread.test.tsx b/ui/src/components/IssueChatThread.test.tsx
index f84f183b765..9ffc0f4ba4c 100644
--- a/ui/src/components/IssueChatThread.test.tsx
+++ b/ui/src/components/IssueChatThread.test.tsx
@@ -84,6 +84,11 @@ const {
 }));
 
 // The session lookup never answers on its own; tests set the account directly.
+vi.mock("@/context/CompanyContext", async (importOriginal) => ({
+  ...(await importOriginal<typeof import("@/context/CompanyContext")>()),
+  useCompany: () => ({ selectedCompany: null }),
+}));
+
 vi.mock("../api/auth", async (importOriginal) => {
   const actual = await importOriginal<typeof import("../api/auth")>();
   return { ...actual, authApi: { ...actual.authApi, getSession: () => new Promise(() => {}) } };
@@ -4468,6 +4473,52 @@ describe("IssueAssigneePausedNotice", () => {
     act(() => root.unmount());
   });
 
+  it.each([
+    ["preparing", "computer is being prepared"],
+    ["verifying", "setup isn't finished"],
+    ["paused", "setup isn't finished"],
+  ])("shows a setup-draft agent (%s) as still being set up, not manually paused", (lifecycleState, detail) => {
+    const root = createRoot(container);
+    const agent = { ...pausedAgent("setup"), lifecycleState, urlKey: "ceo" } as unknown as Agent;
+
+    act(() => {
+      root.render(
+        <MemoryRouter initialEntries={["/ONB/issues/ONB-1"]}>
+          <IssueAssigneePausedNotice agent={agent} issueStatus="todo" onResume={vi.fn()} resuming={false} />
+        </MemoryRouter>,
+      );
+    });
+
+    const text = container.textContent ?? "";
+    expect(text).not.toContain("paused manually");
+    expect(text).not.toContain("is paused");
+    expect(text).toContain("CEO is still being set up");
+    expect(text.toLowerCase()).toContain(detail);
+    // Resuming a setup draft is not the recovery path; finishing setup is.
+    expect(container.querySelector('[data-testid="issue-assignee-paused-resume"]')).toBeNull();
+    if (lifecycleState !== "preparing") {
+      const finish = container.querySelector('[data-testid="issue-assignee-finish-setup"]');
+      expect(finish?.getAttribute("href")).toBe("/ONB/agents/ceo");
+    } else {
+      expect(container.querySelector('[data-testid="issue-assignee-finish-setup"]')).toBeNull();
+    }
+
+    act(() => root.unmount());
+  });
+
+  it("explains a company-archive pause instead of calling it manual", () => {
+    const root = createRoot(container);
+    act(() => {
+      root.render(
+        <IssueAssigneePausedNotice agent={pausedAgent("company_archived")} issueStatus="todo" onResume={vi.fn()} />,
+      );
+    });
+    expect(container.textContent).not.toContain("paused manually");
+    expect(container.textContent).toContain("company is archived");
+    expect(container.querySelector('[data-testid="issue-assignee-paused-resume"]')).toBeNull();
+    act(() => root.unmount());
+  });
+
   it("offers no resume action for budget pauses", () => {
     const root = createRoot(container);
 
diff --git a/ui/src/components/IssueChatThread.tsx b/ui/src/components/IssueChatThread.tsx
index d7cf97d7bc0..bfcd2e18ba3 100644
--- a/ui/src/components/IssueChatThread.tsx
+++ b/ui/src/components/IssueChatThread.tsx
@@ -228,7 +228,7 @@ import {
 import { buildAgentMentionHref } from "@paperclipai/shared";
 import { useComposerStop } from "@/hooks/useComposerStop";
 import { useComposerSubmitKey } from "@/hooks/useComposerSubmitKey";
-import { cn, formatDateTime, formatShortDate } from "../lib/utils";
+import { agentUrl, cn, formatDateTime, formatShortDate } from "../lib/utils";
 import { liveBlueBadge } from "../lib/status-colors";
 import {
   nextWorkMode,
@@ -821,6 +821,41 @@ export function IssueAssigneePausedNotice({
 }) {
   if (!agent || agent.status !== "paused" || issueStatusIsTerminalDisposition(issueStatus)) return null;
 
+  // A freshly created agent is stored as paused with pauseReason "setup" until
+  // its setup finishes. That is not an operator pause, so say what is actually
+  // happening and point at the real recovery path instead of "Resume agent".
+  if (agent.pauseReason === "setup") {
+    // Only computer preparation advances on its own (matches NewAgentSetup).
+    // A "verifying" or parked draft waits for the user to finish the wizard.
+    const stillPreparing = ["preparing", "pausing"].includes(agent.lifecycleState ?? "");
+    return (
+      <div data-testid="issue-assignee-paused-notice" className="mb-3">
+        <InlineBanner
+          tone="info"
+          compact
+          title={
+            <>
+              <span className="font-medium">{agent.name}</span> is still being set up.
+            </>
+          }
+          actions={
+            stillPreparing ? undefined : (
+              <Button size="sm" variant="outline" asChild>
+                <Link to={agentUrl(agent)} data-testid="issue-assignee-finish-setup">
+                  Finish setup
+                </Link>
+              </Button>
+            )
+          }
+        >
+          {stillPreparing
+            ? "Its computer is being prepared. Runs start automatically when setup finishes."
+            : "Its setup isn't finished yet. Finish setup to let it start runs."}
+        </InlineBanner>
+      </div>
+    );
+  }
+
   const pauseDetail =
     agent.pauseReason === "budget"
       ? "It was paused by a budget hard stop."
@@ -828,10 +863,15 @@ export function IssueAssigneePausedNotice({
         ? "It arrived paused from an organization import — imported agents stay parked until you resume them."
         : agent.pauseReason === "system"
           ? "It was paused by the system."
-          : "It was paused manually.";
-  // Budget pauses clear on their own when the budget resets; resuming by hand
-  // would fight the hard stop, so the action is only offered for the rest.
-  const canResume = Boolean(onResume) && agent.pauseReason !== "budget";
+          : agent.pauseReason === "company_archived"
+            ? "It was paused because its company is archived."
+            : agent.pauseReason === "manual"
+              ? "It was paused manually."
+              : "";
+  // Budget pauses clear on their own when the budget resets and archive pauses
+  // clear when the company is restored; resuming by hand would fight either, so
+  // the action is only offered for the rest.
+  const canResume = Boolean(onResume) && agent.pauseReason !== "budget" && agent.pauseReason !== "company_archived";
 
   return (
     <div data-testid="issue-assignee-paused-notice" className="mb-3">
@@ -858,7 +898,7 @@ export function IssueAssigneePausedNotice({
           ) : undefined
         }
       >
-        New runs will not start until the agent is resumed. {pauseDetail}
+        New runs will not start until the agent is resumed.{pauseDetail ? ` ${pauseDetail}` : ""}
       </InlineBanner>
     </div>
   );