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 returned back to work from his vacation in Jamaica. He held a meeting in the conference room to show everybody pictures from his trip. Pam pointed out that the woman in one of the pictures was Jan. Michael tried to cover up the picture, because Jan wanted nobody to know that she went on this trip. Michael privately confessed that he had sex with Jan.
Michael had a picture on his computer of him putting lotion on a topless Jan. He wanted to be funny and send it to his friend Packard, but instead, he sent it to the packaging department at Dunder Mifflin. Darrell forwarded the picture to everybody and it ended up back at Michael's department.
Jim turned to Pam for advice about Karen. He told her he thought the fact of her living down the street might be a bit much since they had only been going out for a month. Pam advised Jim to go easy on Karen. He was thankful for her friendship and her advice. Jim later gave Karen the renters' application she needed to move down the street from him.
Michael and Dwight went down to the packaging department and noticed the guys blew up his picture with Jan and hung it up. When the guys saw Michael, they all applauded him. Michael accepted their applause. He got freaked out when Pam later to Michael that Jan was on her way to the office.
Karen took Pam aside and thanked her for knocking some sense into Jim when it came to her moving plans. Pam told Karen it was nothing. Later on, Pam found a vacant hallway in the building and started sobbing. Dwight found her and she told him there was nothing wrong. He gave her a hankerchief and gave her a shoulder to cry on.
Dundler-Mifflin was getting ready to throw their tropical themed party at Michael's request. Jan showed up and needed to talk to Michael privately. She told the gang that she got back from Arizona and that's why she was so tan. Once they were alone, Jan confessed she was attracted to Michael and kissed him. He realized she had no idea about the picture that was circulating around.