Nobody chose to answer my question, so I'll answer it myself.

To solve the form feed problem with labels:

I went to my Printer's properties in the Printers control panel.
On the Paper tab I clicked on the Custom paper size.
I defined a paper size to match my labels (110mm x 40mm).
I then recreated my label, which saved the new printer configuration to the report.

Now after the printer prints a label it positions itself at the beginning of the next label instead of form feeding a whole page.