I had the same issue. And found out, that Google Contacts were linked to Microsoft Teams (and they ask for full access) and Microsoft ruined it and made mobile and phone in CAPS. Revoke Microsoft access from Google and then you can fix it.
I have a solution at the end .
Contacts -> choose any contact with capital letter > Edit > choose the -MOBILE -> dow at list swipe left and delete all Capital Labels
Done
It isn't Google, and I am really thinking it isn't Apple itself though I noticed it does happen ONLY when you do have those two things linked!
I just went into my contacts because I noticed a person today that had all caps still, but it's been a LONG time since I've been seeing any since I fixed many many of them.
After un-syncing Outlook on both my Windows PC and my phone and my MacBook, I have not had any new all capital letters ever appear again.
It has SOMETHING to do with the Google -> Apple -> Outlook sync flow -- somehow something gets messed up and caps the labels on the way.
It could be something else I don't know of but that is working for me so far.
I had the same issue. And found out, that Google Contacts were linked to Microsoft Teams (and they ask for full access) and Microsoft ruined it and made mobile and phone in CAPS. Revoke Microsoft access from Google and then you can fix it.