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.

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.