Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made as of April 9, 2001, between Jeffrey Scheffer
("Employee") and STANLEY FURNITURE COMPANY, INC., a Delaware corporation (the
"Company").
         WHEREAS, the Company desires to assure that it will have the benefit of
the service and experience of the Employee, as a principal executive officer of
the Company and an integral part of its management, and the Employee is willing
to enter into an agreement to such end upon the terms and conditions set forth
in this Agreement. In consideration of the foregoing and the mutual agreements
herein contained, the parties agree as follows:
         1.       Employment.  The Company hereby employs the Employee and the
Employee hereby accepts employment upon and agrees to the terms and conditions
set forth herein.
         2. Term. The term of employment under this Agreement (the "Term") shall
commence April 9, 2001 and end on December 31, 2001 and, effective January 1,
2002, shall continue for each calendar year thereafter unless either party gives
notice (a "Termination Notice") on or before November 1 of any calendar year
that employment under this Agreement will not continue for an additional period
of one year beginning on the following January 1.
         3.       Compensation.
                  a. Salary. During the Employee's employment hereunder, the
Company shall pay the Employee for all services rendered by the Employee a base
salary at an annual rate of at least $300,000, with upward annual adjustments as
the Board of Directors of the Company shall deem appropriate. Such salary shall
be payable to the Employee in accordance with the Company's usual paying
practices, but not less frequently than monthly.
                  b. Bonus. In addition to base salary, the Employee shall be
entitled to receive a potential annual bonus of $270,000, prorated for 2001,
subject to upward adjustment. The amount of such bonus for any fiscal year shall
be related to the achievement of certain profit thresholds and objectives to be
set at the beginning of each fiscal year by the Board of Directors of the
Company.
                  c.       Reimbursement.  The Company shall also reimburse the
Employee for the forfeiture of any bonus (prorata for 11 months ended March
2001) from the Employee's previous Employer resulting from Employee's acceptance
of employment with the Company, not to exceed $115,000.
                  d. Other Benefits. The Employee shall also receive such other
customary employee "fringe" benefits as are afforded generally by the Company to
its senior personnel, including grants of stock options and the use of a Company
car. The Employee shall also receive a grant of 100,000 shares of Company common
stock with an exercise price based on the fair market value on April 25, 2001.
These shares shall vest 20% at the date of grant and an additional 20% each
April 25 thereafter until fully vested.
         4. Duties. The Employee shall perform the duties of President and Chief
Operating Officer of the Company and shall, under the direction of the Chairman
and Chief Executive Officer, faithfully and to the best of his ability perform
such duties and such other duties and responsibilities as may be reasonably
assigned by the Chairman and Chief Executive Officer from time to time,
including service as an officer or director of any subsidiaries of the Company
but not including service as an officer or director of nonsubsidiary affiliates
not in the same business as the Company.
         5. Extent of Services. During the Employee's employment hereunder, the
Employee shall devote his entire working time, attention and energy to the
business of the Company and shall not be engaged in any other active business of
any kind except as authorized by the Chairman and Chief Executive Officer.
         6.       Restrictive Covenants.
                  a. Non-competition Restriction. Except with the prior consent
in writing of the Company or as provided in the last sentence of this Section
6(a), the Employee shall not (A) during his employment hereunder or (B) for a
period of two years after termination of his employment hereunder in the event
Employee receives severance payments pursuant to Section 7(b) or Section 7(e),
directly or indirectly manage, operate, control, be employed by, participate in,
invest in or be connected in any manner with the management, operation,
ownership or control of any business or venture which is in competition in the
United States with the business of the Company, provided that nothing herein
shall prohibit the Employee from owning securities of the Company or up to 5% of
the outstanding voting securities of any issuer which is listed on the New York
or American Stock Exchange or as to which trading is reported or quoted on the
NASDAQ System. The provisions of this Section 6(a) shall not be applicable in
the event the Employee terminates his employment under Section 7(d).
                  b. Non-solicitation Agreement. Except with the prior consent
in writing of the Company, the Employee shall not directly or indirectly hire or
employ in any capacity or solicit the employment of or offer employment to or
entice away or in any other manner persuade or attempt to persuade any person
employed by the Company or any of its subsidiaries to leave the employ of any of
them. This Section 6(b) of this Agreement shall remain in full force and effect
for a period of two years after the Term.
                  c. Confidential Information. The Employee further agrees to
keep confidential and not use for his personal benefit or for any other person's
benefit, except for the benefit of the Company, any and all proprietary
information received by the Employee relating to inventions, products,
production methods, financial matters, sources of supply, markets, marketing
methods and customers of the Company on the date hereof or developed by or for
it during the Term. This Section 6(c) of this Agreement shall remain in full
force and effect after the Term without limit in point of time, but shall cease
to apply to information that legitimately comes into the public domain.
                  d. Specific Enforcement. It is agreed and understood by the
parties hereto that, in view of the nature of the business of the Company, the
restrictions in subsections a., b. and c. above are reasonable and necessary to
protect the legitimate interests of the Company, monetary damages alone are not
an adequate remedy for any breach of such provisions, and any violation thereof
would result in irreparable injuries to the Company. The Employee therefore
acknowledges that, in the event of his violation of any of such restrictions,
the Company shall be entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled.
                  e. Severability and Extension. If the period of time or the
area specified in subsection a. above is determined to be unreasonable in any
proceeding, such period shall be reduced by such number of months or the area
shall be reduced by the elimination of such portion thereof, or both, so that
such restrictions may be enforced for such time and in such area as is
determined to be reasonable. If the Employee violates any of the restrictions
contained in subsection a. above, the restrictive period shall not run in favor
of the Employee from the time of the commencement of any such violation until
such time as such violation shall cease.
         7.       Termination of Employment and Severance Payments.
                  a. Termination for Cause. During the Term, the Company may
terminate the Employee's employment under this Agreement at any time for Cause
(as hereinafter defined) upon written notice specifying the cause and date of
termination. Payments under this Agreement shall cease as of the date of
termination for Cause. For this purpose, "Cause" means gross or willful neglect
of duty which is not corrected after 30 days written notice thereof; misconduct,
malfeasance, fraud or dishonesty which materially and adversely affects the
Company or its reputation in the industry; or the commission of a felony or a
crime involving moral turpitude.
                  b. Termination without Cause. During the Term, the Company may
terminate the Employee's employment under this Agreement at any time for any
reason other than for Cause upon written notice specifying the date of
termination and the Employee shall be entitled to the payments provided under
this Section 7(b). In the event the Company terminates the Employee's employment
for reasons other than for Cause (which includes termination by the Company for
what the Company believes to be Cause when it is ultimately determined that the
Employee was terminated without Cause), then the Employee shall receive
severance payments as follows: (i) the Employee shall continue to receive his
base salary on a monthly basis for the remainder of the calendar year in which
such termination occurred, (ii) if termination occurs after December 31, 2001,
the Employee shall be paid an annual bonus for the calendar year in which such
termination occurred equal to the average of the bonuses paid to the Employee
for the three fiscal years (or if shorter, the period of the Employee's
employment) preceding the year in which termination occurred (which bonus shall
be payable within ninety days after the close of the fiscal year in which such
termination occurs), and (iii) during the two calendar years following the year
in which such termination occurs, the Employee shall receive annual severance
pay equal to the base salary in effect at the termination of employment plus, if
termination occurs after December 31, 2001, an amount equal to the average of
the bonuses paid to the Employee for the three fiscal years (or if shorter, the
period of the Employee's employment) preceding the year in which employment is
terminated, which annual severance pay shall be paid on a monthly basis during
the two years following the termination of employment. If there shall take place
a Change in Control (as defined in Section 7(d)) of the Company on or before
termination of Employment, the Employee shall be entitled to receive the total
severance pay provided for under this Section 7(b) in a single payment on the
date of such Employee's termination, or if a Change in Control occurs after the
date of such Employee's termination, the Employee shall be entitled to receive
the total severance pay remaining to be paid pursuant to this Section 7(b) in a
single payment on the date when a Change in Control occurs. In the event the
independent accountants acting as auditors for the Company on the date of a
Change in Control (or another accounting firm designated by them) determine that
such single payment, together with other compensation received by the Employee
that is a contingent on a Change in Control, would constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended and regulations thereunder, the single payment to the Employee
shall be reduced to the maximum amount which may be paid without such payments
being "excess parachute payments".
                  c. Termination in Event of Death or Disability. If the
Employee dies or becomes disabled during the Term, his employment under this
Agreement shall terminate and payments of base salary hereunder shall cease as
of the end of the month in which such event shall occur. For purposes of this
Agreement, the Employee shall be deemed to be disabled if he is unable to
perform his duties hereunder for any period of four consecutive months or for
six months in any twelve-month period. If the Employee's employment is
terminated hereunder pursuant to this Section 7(c), the Employee or Employee's
estate shall be entitled to a bonus payment in an amount equal to the amount
determined by multiplying the bonus which would otherwise have been payable for
the full fiscal year in which the Employee dies or becomes disabled by a
fraction, the numerator of which is the number of days the Employee was employed
during such fiscal year and the denominator of which is 365. Such bonus shall be
payable ninety days after the close of the fiscal year in which Employee dies or
becomes disabled.
                  d. Termination on Change of Control. By delivering 15 days
written notice to the Company, Employee may terminate his employment for Good
Reason under this Agreement at any time within one year after a Change in
Control and the Employee shall be entitled to the payments provided under
Section 7(e). "Good Reason" means a change in circumstances described in (i),
(ii), (iii), (iv) or (v):
                  (i)   The Employee's base salary is reduced,
                  (ii)  The Employee is not in good faith considered for a bonus
         as described in Section 3b.,
                  (iii) The Company fails to provide customary employee fringe
         benefits as required by Section 3c.,
                  (iv) The Employee's place of employment is relocated to a
         location further than 100 miles from Employee's current place of
         employment, which is 1641 Fairystone Park Highway, Stanleytown,
         Virginia 24168, or
                  (v) The Employee's working conditions or management
         responsibilities are substantially diminished (other than on account of
         the Employee's disability, as defined in Section 7c.).
However, if the Employee consents in writing to a change in circumstance, "Good
Reason" as defined above, will not include the change in circumstance consented
to by the Employee. "Change of Control" means an event described in (i), (ii),
(iii), or (iv) as follows:
                  (i) The acquisition by a Group of Beneficial Ownership of 35%
         or more of the Stock or the Voting Power of the Company, but excluding
         for this purpose: (A) any acquisition by the Company (or a subsidiary),
         or an employee benefit plan of the Company; (B) any acquisition of
         Stock of the Company by management employees of the Company; or (C) the
         ownership of Stock by a Group that owns 10% or more of the Stock or
         Voting Power of the Company on the date of this Agreement; provided,
         however, the acquisition of additional Stock by any such Group in an
         amount greater than 5% of the then outstanding Stock shall not be
         excluded and shall constitute a Change of Control. "Group" means any
         individual, entity or group within the meaning of Sections 13(d)(3) or
         14(d)(2) of the Securities Exchange Act of 1934, as amended (the
         "Act"), "Beneficial Ownership" has the meaning in Rule 13d-3
         promulgated under the Act, "Stock" means the then outstanding shares of
         common stock of the Company, and "Voting Power" means the combined
         voting power of the outstanding voting securities entitled to vote
         generally in the election of directors.
                  (ii) Individuals who constitute the board of directors of the
         Company on the date of this Agreement (the "Incumbent Board") cease to
         constitute at least a majority of the board of directors of the Company
         (the "Board"), provided that any director whose nomination was approved
         by a majority of the Incumbent Board shall be considered a member of
         the Incumbent Board unless such individual's initial assumption of
         office is in connection with an actual or threatened election contest
         (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
         under the Act).
                  (iii) Approval by the shareholders of the Company of a
         reorganization, merger or consolidation, in each case, in which the
         owners of more than 50% of the Stock or Voting Power of the Company do
         not, following such reorganization, merger or consolidation,
         beneficially own, directly or indirectly, more than 50% of the Stock or
         Voting Power of the corporation resulting from such reorganization,
         merger or consolidation.
                  (iv) A complete liquidation or dissolution of the Company or
         of its sale or other disposition of all or substantially all of the
         assets of the Company.
                  e. Severance Payments. The Employee shall be entitled to the
severance payment provided in this Section 7(e) in the event (i) the Employee
terminates employment on or after the occurrence of a Change in Control pursuant
to Section 7(d), (ii) the Employee's employment terminates as a result of the
Company's delivery of a Termination Notice, or (iii) the Employee voluntarily
terminates his employment and the Company elects to make severance payments
provided in this Section 7(e) in order to have the non-competition covenant in
Section 6(a) be effective. In the event the Employee is entitled to severance
payment pursuant to the foregoing sentence, the Employee shall receive annual
severance pay equal to the base salary in effect at the termination of
employment plus, if termination occurs after December 31, 2001, an amount equal
to the average of the bonuses paid to the Employee for the three fiscal years
(or if shorter, the period of the Employee's employment) preceding the year in
which employment is terminated, which annual severance pay shall be paid on a
monthly basis during the two years following the termination of employment. If
there shall take place a Change in Control of the Company on or before
termination of Employment, the Employee shall be entitled to receive the total
severance pay provided for under this Section 7(e) in a single payment on the
date of such Employee's termination. In the event the independent accountants
acting as auditors for the Company on the date of a Change in Control (or
another accounting firm designated by them) determine that such single payment,
together with other compensation received by the Employee that is a contingent
on a Change in Control, would constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended and
regulations thereunder, the single payment to the Employee shall be reduced to
the maximum amount which may be paid without such payments being "excess
parachute payments".
         8. Former Employer. The Employee acknowledges that, during the
Employee's employment hereunder, the Employee owes a duty to his former employer
not to divulge to or use on behalf of anyone, including the Company, any
confidential information or trade secrets learned by virtue of his employment
with his former employer. Accordingly, the Employee must not use or disclose to
the Company, and agrees not to use or disclose to the Company, confidential
information or trade secrets learned by virtue of the Employee's employment with
his former employer.
         9.       Vacation.  During the Term, the Employee shall be entitled to
a vacation in each calendar year in accordance with the Company's policy during
which vacation his compensation shall be paid in full.
         10. Insurance. During the Term, the Company will continue to include
the Employee and his eligible dependents as insureds under its existing
insurance policies on the same terms and conditions and with the same benefits
as those in effect on the date hereof; provided, however, that the forgoing
shall not prohibit the Company from adopting alternative benefit packages and
programs so long as the benefits thereunder, considered in the aggregate, are
comparable to the benefits provided to similarly situated employees of the
Company.
         11.      Notice.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be effective upon the
mailing thereof by registered or certified mail, postage prepaid, and addressed
as set forth below:
                  a.       If to the Company:

                              Stanley Furniture Company, Inc.
                              Route 57, P.O. Box 30
                              Stanleytown, Virginia  24168

                              Attention: Chairman and Chief Executive Officer

                  b.       If to the Employee:

                              Jeffrey Scheffer
                              5004 Quincemoor Ct.
                              Greensboro, NC  27407

                                        and

                              Brian J. McMillan
                              Brooks, Pierce, McLendon, Humphrey &
                              Leonard, L.L.P.
                              P. O. Box 26000
                              Greensboro, NC  27420

         Any party may change the address to which notices are to be addressed
by giving the other party written notice in the manner herein set forth.
         12.      Waiver of Breach.  Waiver by either party of a breach of any
provision of this Agreement by the other shall not operate as a waiver of any
subsequent breach by such other party.
         13.      Entire Agreement. This Agreement contains the entire agreement
of the parties in this matter and supersedes any other agreement, oral or
written, concerning the employment or compensation of the Employee by the
Company.  It may be changed only by an agreement in writing signed by both
parties hereto.
         14.      Governing Law.  This Agreement shall be governed by the laws
of the Commonwealth of Virginia.
         15.      Benefit.  This Agreement shall be binding upon and inure to
the benefit of and shall be enforceable by and against the Company, its
successors and assigns, and the Employee, his heirs, beneficiaries and legal
representatives.
         IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement as of the day and year above written.

                              STANLEY FURNITURE COMPANY, INC.


                              By: /s/Albert L. Prillaman
                                  ------------------------------------
                                  Albert L. Prillaman
                                  Chairman and Chief Executive Officer


                                  /s/Jeffrey Scheffer
                                  ------------------------------------
                                  Jeffrey Scheffer