When Michael unintentionally outs a gay employee, he stumbles through a sensitivity mine-field. Also, we find out what happened with Jim and Pam.

Michael had made it a point to have Movie Monday every week. He called the office into the conference room to watch a 30-minute installment of Varsity Blues, but Jan made an unexpected visit and did not like what she saw.

Jim felt awkward at the morning meeting when his boss put him charge of managing Karen and her responsibilities. The other co-workers looked at Jim as a kiss ass. Later on, he flirted with Karen in the break room and told her she shouldn't work until she found her favorite snack chips.

Dwight was very excited because he got to take Ryan on his first sales call. He couldn't wait to show Ryan how the sales are really done. Before that, the men took a little side trip to the Schrute family beet farm. Dwight thought it would be funny to leave Ryan on the farm.

Michael was educating the entire staff about Diwali, the Hindu holiday that Kelly celebrated. Kelly had invited everybody from work to the celebration. Pam was unsure if she was going to make it, she later confided in Angela that she was saddened because she had nobody to attend the celebration with.

Jan told Michael that the board had voted to close the Scranton branch. There would be a select group of employees that would get a severance package; the others would be going to work at the Stamford branch. She informed Michael that he would be one who would get a severance package.

The Scranton branch was getting ready for their new employees to arrive in from the defunct Stamford branch. Pam was especially excited to be reunited with Jim. While, Michael was most concerned with impressing his new staff.

Angela and Kevin were trying to figure out where extra money in the budget came from. Jan let them know it was money Dunder-Mifflin received for hiring an ex-convict. Michael swore he never hired an ex-convict. Jan informed him that the person must have come from the merger.

Michael was in the holiday spirit and couldn't wait to share in it with his girlfriend, Carol. He had bought two tickets to paradise, hoping to whisk her away on a romantic vacation to Jamaica. Carol came by the office early to have a talk with Michael and it didn't go well.

Karen and Jim had their first big fight in the relationship. Karen had been living in a hotel since taking her job in Scranton. When she decided to live next door to Jim, he took it as the next step to living together and that was too fast. She was not pleased with his response.

Michael decided to send his employees out into the field for sales calls. He paired himself up with Andy. He let the veterans choose who they wanted their partners to be. Phyllis chose Karen, Stanley chose Ryan and that left Jim and Dwight paired together. This wasn't the first time Dwight and Jim had done sales calls together.

Since Dwight's departure, Andy had been clinging to Michael. Andy's antics had been wearing very thin on his co-workers. In fact, Andy left Jim actually wishing Dwight would come back.

Michael celebrates Phyllis' wedding shower by bringing two adult performers into the office, a stripper and Ben Franklin. Meanwhile, Karen confronts Pam about her past history with Jim.

It was the day of Phyllis and Bob's wedding. Pam was upset because she noticed Phyllis had basically stolen Pam's ideas for her and Roy's would-be wedding. Meanwhile, Michael was very excited to be in charge of pushing Phyllis's father's wheelchair down the aisle.

Roy stopped by Pam's desk to let her know how excited he was to see her art show. She reminded him that it was just a small show being put on by her art class. Pam later admitted she was very happy she was back together with Roy because it showed maturity. Jim feigns indifference to the reconciliation.

Michael was excited to be attending a party at his CFO's house. He carpooled with Dwight and was also looking forward to meeting Jan at the party. Jan wanted to spend a night alone with Michael, but he thought it was important to come out as a couple to all of their co-workers.

Roy paced in the parking lot outside Dunder-Mifflin and then charged the building looking for Jim. When he spots Jim and rushed him, only to get pepper sprayed in the eyes by Dwight, who managed to spray everybody around him, as well.

Andy was back to work, fresh from anger management training. He insisted on being called Drew, even though Jim continued to call him Andy just to toy with him. Meanwhile, Dwight had decided to shun Andy for the next three years.

Michael was in crisis mode at Dunder-Mifflin when a disgruntled employee at the paper mill put an obscene watermark on one of their most popular orders of paper. Michael called the staff into a meeting and pointed the blame on Creed, who was responsible for quality assurance at the paper mill and blew it off.

Phyllis walked into the office looking pale and shocked. A concerned staff surrounded her for comfort. She told them she had been flashed in the parking lot. Jim alerted the police and they already had three other incidents of flashing in the area. Michael didn't think much of it, because it was Phyllis.

Michael was shocked when he received a call from Corporate wanting him to interview for a position. Michael was happy, but he also had other things on his mind. Beach Day was coming up and he was taking the crew out for some fun in the sun. Not before reminding Toby he couldn't go because somebody had to stay in the office.

After Pam's outburst at Beach Day, she and Jim had a talk and realized how much they both missed their friendship. Pam never regretted her speech she gave to Jim in front of the rest of the staff; in fact, she was happy that it only took her three years to summon the courage to say what was on her mind.