This episode is "Bad Risk," the fourth episode broadcast in the second season. It was written by two freelancers, Gene Fournier and Tom Joachim. But I think that some of the episode, especially Herb's dialogue, has a bunch of rewriting by Steven Kampmann and Peter Torokvei, two Toronto Second City writer-performers who got hired for WKRP on the basis of the "Cisco Kid" redubbed video they did with Martin Short. Their "voices" as writers were distinctive enough that their contributions could sometimes stand out in an episode, and they did a lot to develop the character of Herb, a character they kind of fell in love with. Starting in the second season, Herb starts to take on some of Kampmann's mannerisms; if you've seen Kampmann on the first two seasons of Newhart, you might think he was doing Herb from WKRP but it's just as likely that Herb was mimicking Kampmann.
This is also the last episode of the show that is without one of the eight regulars; after this, all eight characters had to appear even if it was only for one line.
This is one of the episodes that the Comedy Network only showed in a 22-minute cut version but someone kindly sent me a copy of a CBS broadcast (again, if anyone out there has copies of original-length CBS versions please let me know and we can work out a trade). So the upload below sometimes cuts back and forth between one copy and another, but it's better than not having two-and-a-half minutes' worth of the episode.
Music: "Good Girls Don't" by The Knack, "Lonesome Loser" by Little River Band, and "Bitch" by the Rolling Stones.
Cold opening and Act 1:
Act 2, tag and credits: