diff --git a/CHANGELOG.md b/CHANGELOG.md
index 90e18046..2af053ff 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -12,6 +12,8 @@ Changes since the last non-beta release.
 
 ### Fixed
 
+- Fixes failing tests for Ruby 2.7 due to `Rack::Handler::Puma.respond_to?(:config)` [PR 501](https://github.com/shakacode/shakapacker/pull/501) by [adriangohjw](https://github.com/adriangohjw)
+
 - Improve documentation for using Yarn PnP [PR 484](https://github.com/shakacode/shakapacker/pull/484) by [G-Rath](https://github.com/g-rath).
 
 - Remove old `yarn` bin script [PR 483](https://github.com/shakacode/shakapacker/pull/483) by [G-Rath](https://github.com/g-rath).
diff --git a/spec/generator_specs/generator_spec.rb b/spec/generator_specs/generator_spec.rb
index ed4ed0fb..df56b2a8 100644
--- a/spec/generator_specs/generator_spec.rb
+++ b/spec/generator_specs/generator_spec.rb
@@ -19,10 +19,23 @@
     ))
 
     Bundler.with_unbundled_env do
-      sh_in_dir({}, BASE_RAILS_APP_PATH, %(
-        gem update bundler
-        bundle add shakapacker --path "#{GEM_ROOT}"
-      ))
+      if RUBY_VERSION.start_with?("2.")
+        # Bundler's version compatible with Ruby 2 does not support "--path" switch
+        # Overwriting "rack" version due to unless Rack::Handler::Puma.respond_to?(:config) in Capybara gem v3.39.2 or earlier.
+        # Issue resolved in Capybara v3.40.0, but Ruby 2.7 support dropped; last compatible version is v3.39.2.
+        # Ref: https://github.com/shakacode/shakapacker/issues/498
+        sh_in_dir({}, BASE_RAILS_APP_PATH, %(
+          gem update bundler
+          echo 'gem "shakapacker", :path => "#{GEM_ROOT}"' >> Gemfile
+          echo 'gem "rack", "< 3.0.0"' >> Gemfile
+          bundle install
+        ))
+      else
+        sh_in_dir({}, BASE_RAILS_APP_PATH, %(
+          gem update bundler
+          bundle add shakapacker --path "#{GEM_ROOT}"
+        ))
+      end
     end
   end