Apple Watch asks for a passcode, but I never set one up

Hello - so I've had my series 4 watch for about a year and a half and love it. My employer's phone policy requires a strong password with upper/lowercase letters, numbers and special characters/symbols. As such, the company policy is also that our watches must be unlocked using our iPhone (because the watch is limited to a simple numeric passcode). So from the first day I set up my watch, I've always used the "unlock with iPhone" feature and never set up a passcode. Now, after the recent update, my watch still unlocks with my iPhone, but I cannot use any features (messages, workouts, heart rate, etc.) without receiving the message "Your iPhone has a policy that requires a new Apple Watch passcode". However, if I hit the "create new" button, it asks for my current passcode...which doesn't exist. I also try to go into my watch app on my phone to create a passcode and I get the message "Apple Watch is busy at the moment, but you can try again when it's done with its current task". Has anybody had any issues with their watch doing this? Why can't I continue to unlock with my iPhone? None of my coworkers have this issue, so it's not from a change in the company policy.