I see a couple of problems including that you're mixing AWT (i.e., Label) and Swing (i.e., everything else) components, and this can lead to trouble if done without extreme care and without a good reason (which I don't see at present).
Also, what are you trying to do here?:
This method returns a Color object while states it should return a Paint object. Does this compile?
Finally, the setBackground(Color c) method is probably the best way to set a JPanel's color that I know of.