Mitch and Cody witness a disaster involving a parasailer and a boat. While heading for the rescue, they are again beaten to the scene by Bayguard, a new firm that specializes in privatizing lifeguards. When the rescue has been completed, Mitch is introduced to Alex Ryker, CEO of Bayguard. She tells Mitch that she plans on going up against him for the county contract as Baywatch's contract is about to expire. The next day, Alex shows the Chief a videotape of some of Bayguard's amazing rescues. She also shown the Chief a tape showcasing the Baywatch team apparently slacking off. Mitch objects, but the Chief thinks Alex's proposal warrants consideration. Later, Mitch tells his lifeguards to start acting like professionals, otherwise they will not have any jobs left by the end of the week.

Meanwhile, when April sees a man having a heart attack, she calls for backup and heads for the water. But Arnold, one of the Bayguards, detains her. This upsets Mitch who brings April to Bayguard for an apology from Alex. When Mitch and April arrive to Bayguard, they see Arnold paying off a stuntman. That stuntman turns out to be the parasailer who almost drowned. Mitch realizes the rescue was a fraud. After that, Cody fakes an argue with Mitch and starts working at Bayguard instead. Alex wants him as her new lieutenant.

Later Cody approaches the Bayguard mobile tower truck and climbs inside. From there he talks to Mitch over his cell phone, and by using Bayguard's lap top computer, he finds out that almost all of the lifeguards at Bayguard are on short-term contracts. When the summer starts, Alex will be left alone with a couple of wannabees protecting the beach. But Arnold arrives to the truck and Cody is busted. When April tells them that a diabetic boy named Teddy is missing, Baywatch and Bayguard must work together as a team. It turns out that Teddy is trapped in a storm drain. Mitch and Alex manages to get him out. Later, Mitch learns the Chief has hired Alex to be Baywatch's new administrative consultant. Bridget decides, after an opportunity presents itself, to stay at Baywatch rather than become a model.

The episode starts with someone rescuing a surfer in trouble. When the rescue has been completed, the phantom lifeguard is nowhere to be seen. A minute later, JD arrives in a lifeguard truck and he is able to see tracks in the sand showing clearly that someone else made the rescue. He tells Cody, Sheryl and Bridget about the incident. Later during a roll call, Mitch is surprised to find out that Alex has hired a new maintenance person, a girl named Jessie Owens. Everyone likes her at first, especially Cody and JD. While Cody and JD are on patrol, they are surprised to see Jessie jumping off a pier. They are convinced that she is trying to commit suicide. But they soon figure out that Jessie wants to become a stuntwoman. Jumping off the pier was just one of many tricks she has been working on. It turns out that Jessie is the phantom lifeguard when she rescues a little girl named Beth and then disappears mysteriously once again. It does not take very long until everyone finds out that Jessie turns out to be a bad maintenance person. Alex has no choice but to fire her. While Alex is talking to Jessie, she notices scars on her arm. Beth, the little girl Jessie rescued, had the same kind of scars. Later Jessie rescues Sean. When two of Sean's future fraternity pals bury him up to his neck, he starts sinking into a sinkhole. Mitch, Alex, JD and Cody assist Jessie during the rescue. When everyone has seen for themselves what a great lifeguard Jessie is, she gets the opportunity to join rookie school that is supposed to start next week. One day, Alex approaches Mitch and tells him that she wants to come out from behind her desk. Mitch knows that she is a lifeguard and a certified paramedic, but still he lets her stay at headquarters.

Ed Symes returns (8.18 "Quarantine") and offers Mitch some free medical supplies if he lets him ride in the call car with him. Alex comes along and Ed bothers her all the time. When Sheryl calls them from her tower about a man with a possible heart attack, they drive to her tower. It turns out, however, the man just has cramps from a too-vigorous workout. Ed who wants to be a hero, rushes towards them with the defibrillator. Trying to save the jogger, Mitch is shocked instead. To get even with Ed, he and Alex ask him to demonstrate a sling/stretcher victim. When Ed is completely tied up and helpless, Mitch and Alex leave him on the beach.