Every year at Associated Strategies' office Christmas party, Schmidt's boss, Kim, would force him to dress like Sexy Santa because he was the only male in the office. His costume consisted of no shirt, velvet short shorts, a Santa hat, and a furry neck collar with plastic 'coal' buttons. Though he tried to make the best of it by garnering drunken secrets about his coworkers that he could hold over their heads for a year, he admitted that the role made him feel demoralized.
Sexy Santa was abolished after Schmidt stood up to Kim, who suggestively offered herself for the role of Sexy Santa at next year's office party. It's not known if she followed through, as Schmidt's office holiday party was not among those attended by the gang in season two's Christmas-themed episode, "Santa."
Schmidt is lamenting the fact that he is, yet again, going to have to dress like Sexy Senta at his company Christmas party - an annual tradition forced upon him as the only male in his office. He tells Nick and Winston that he likes the gig because his drunken coworkers whisper secrets when they sit on his lap, which he then uses to subtly undermine and control them for the rest of the year. When Winston sarcastically remarks that his actions are in the true spirit of Christmas, they start to wrestle despite the fact that they're both wearing the roller skates Jess gifted them for the holidays.
When Schmidt's friends arrive at his office party, they spot him right away, sitting topless on his throne chair with a candy cane scepter. Right away, Jess realizes that he's wearing her red velvet shorts. He waves to the gang, and Kim calls him out from across the party for breaking character. "Hey, hey, Santa voice!" she yells. "This isn't temple!"
Schmidt takes a break at his desk because he has a bad case of "Santa lap," due to the fact that most of the women in the office are wearing wool. Kim stops by and tells him to get back to work soon, with little concern for his discomfort. Overhearing their exchange, Cece stops by Schmidt's throne, wearing the horrific perfume that he got her as Christmas gift. She urges him to gain Kim's respect by standing up to her if he doesn't want to play Secret Santa anymore, and Schmidt reluctantly takes her advice. To his surprise, Kim is receptive to abolishing his role as Sexy Santa, as she remarks suggestively that she just might have to play Sexy Santa at next year's office party.
Unfortunately, their discussion, in which they refer to (Sexy) Santa as "dead," is overheard by the office president's cowardly son, Elvin, who runs from them screaming in despair.