Ted feels that employees should keep their personal and work lives separate. He's the only one: Linda asks him if he had sex on his most recent date, and when he refuses to discuss it, she figures he didn't. Meanwhile, Lem has received a red lab coat to wear in the lab. He's the only one who has received a red lab coat, and he and Phil wonder what it means.
Ted and Linda give a report on their non-spoiling cheese project to Veronica, and ask for an extension. They soon realize that she's snoring because she's fallen asleep with her eyes open. She finally admits that her strenuous lifestyle with her boyfriend, Mordor the magician, is keeping her from getting much sleep. And when they are in bed, they end up having sex. Over and over and over again. She insists everything is fine, but as they go, Linda tells Ted they need Veronica at the top of her game so she can request the extension they need. She wants Ted to talk to Mordor since they're both guys. He says he won't because he has no business getting involved in Veronica's personal life.
When Veridian refuse to tell them what the red lab coat means, Phil and Lem come to Ted. He suggests that its' an honor bestowed by the company but they're not convinced. Phil insists that he did the exact same work, and they both decide to work harder to earn the coat. Linda comes in to tell Ted that Mordor is there for a lunch date with Veronica. Ted reluctantly agrees to talk to Mordor. Mordor figures that Ted is attracted to him, like moist men are. Once Ted convinces him he's not, he explains that Veronica needs her rest for work so Mordor shouldn't make love to her quite so often. Mordor apparently understands and agrees.
A little later, Linda finds Mordor having sex with another woman in a supply closet. She tells Ted and insists that Veronica would want to know, and he should tell her. Ted starts to tell Veronica, until she talks about how much better her life is with Mordor. He switches topics to the red lab coat, and Veronica tells him in confidence that Veridian has conducted studies showing that doing random things to employees makes them nervous and increase productivity. As Ted goes, he reconsiders and tells her that Mordor is cheating on her.
After Ted leaves, Mordor comes in to see Veronica as she packs for their upcoming scuba trip. She shoots him with a spear gun and asks who he's cheating on her with. She then takes him to the hospital. He'll survive, and Veronica blames Ted for butting into her personal life and telling her she was cheating on him. She's insists that her subconscious wanted to shoot Mordor, because her subconscious is a douche. Veronica then goes to break things off with Mordor.
Lem gets his white lab coat back. However, one of their co-workers, Lonny, gets the red coat. A jealous Phil wonders why he didn't get it after all the work he did.
The next day, Ted starts to put down Mordor, until Veronica reveals that they made up. Ted blurts out that he told Mordor to stop having so much sex with Veronica, and she angrily tells him that she and Ted need some distance. She banishes him to the Ridiculously Tiny Office. Phil and Lem come to see him and complain about the lab coat, and Ted tries to tell them not to worry about it without actually disobeying the company and telling them the truth. Linda comes in and wants to know why Ted was dumb enough to put down Mordor to Veronica. He insists that it's her fault for telling him to get involved in Veronica's personal life. As the two argue, Phil and Lem slip out and figure that Lem got the red lab coat as punishment.
As Ted waits for Veronica to forgive him, Phil gets the red lab coat. Now that they think it's punishment, he and Lem resolve to work even harder.
When Ted goes to his office to get some papers, he finds Mordor having sex with Tiffany from Accounting. Mordor explains that since he and Veronica are even after she shot him, he can have another affair. He prefers promiscuous sex over pain. Ted tells the magician that he doesn't deserve Veronica. Insulted, Mordor attacks Ted with a Peruvian marital art slapping style and beats him into submission.
When Veronica finds out what happened, she goes to Ted's Ridiculously Tiny Office and treats his wounds. She admits that he's the first person who has ever stood up for her and squeezes out. She runs into Linda, who has heard what happened and admits that a guy fighting for a woman's honor is hot. Veronica points out that Ted actually would be good in a relationship.
Ted finally decides to help Phil and Lem by getting rid of the red lab coat. He secretly leaves a red rose, figuring that if employees are going to be confused, it should be over something nice that brightens their environment. Phil and Lem figure that the rose is a warning from the company.