Sugar Shack Donuts and owner hit with sexual harassment and discrimination lawsuit

September 23, 2020

2019, Erin Edgerton/The Daily Progress

A former employee of Sugar Shack Donuts is accusing the company’s CEO of sexual harassment and discrimination in a federal civil rights lawsuit.

The suit, filed Monday in U.S. District Court in Richmond, alleges that Ian Kelley, the CEO and a founder of the Chesterfield County-based company, promoted an 18-year-old part-time employee to the position of store manager and used that promotion as leverage to start a sexual relationship with her. The woman claims she was fired after she filed a complaint about the relationship, which she claims also included an apartment secretly paid for by the company.

The 10-page complaint by Virginia Williams names Sugar Shack Donuts LLC; SSD Staffing LLC, which handles the company payroll; and Kelley as defendants.

“We are working with our attorneys to respond to these baseless claims,” Kelley said in an email.

Williams, a Richmond resident, began working part time for Sugar Shack in 2016 when she was 17 years old, then switched to full-time work there after graduating high school the next year, according to the suit.

In October 2011, Terry tore his meniscus while on the job. The knee injury limited his ability to walk, but he continued to work after his supervisor assigned him to shop duty at the DPU facility. The arrangement persisted as the effects of Terry’s injury lingered and his mobility was hampered, according to the lawsuit.

At various times she worked in the Midlothian, Hanover and Parham Road locations and in mobile operations.

Kelley, who the lawsuit notes was about 32 years old and married with children, “allegedly paid unusually close attention to Williams when he visited her job sites” and repeatedly asked her about her romantic relationships.

Williams turned 18 in July 2017 and planned to leave the area and her Sugar Shack job to attend college in another part of the state, the suit said. Kelley, according to the suit, promised to promote her to be the manager of a store that was planned to be opened in Charlottesville.

The suit said she decided to stay and work for Sugar Shack and waited for the new location to open.

Williams alleges that in the summer of 2018, Kelley asked her to perform oral sex on him and implied, according to the suit, that he had given her a significant job advance and that she needed to show him gratitude.

“Feeling that she would lose her job and/or promotion if she did not comply, Williams felt she had no choice but to agree to his request,” the suit alleges.

The suit claims Kelley also secretly arranged for the company to pay for most of Williams’ apartment rent and from June 2018 through January 2019 he continued to request Williams to perform oral or manual sex on him.

Williams also texted sexual pictures of herself to Kelley at Kelley’s request, according to the lawsuit.

Williams said that in January 2019 she complained to the company’s district manager about the alleged sexual harassment and hostile work environment.

The suit says that in early 2019, Kelley became involved in disputes with other owners of the company and disengaged from the day-to-day operations of the company. Two lawsuits were filed against Kelley and Sugar Shack in 2019 by an investor and former partner.

The company brought in a human resources consultant to examine Kelley’s personnel practices, according to the 2020 suit. According to the suit, Williams reported Kelley’s alleged sexual harassment to the consultant and a minority owner of Sugar Shack. But the suit alleges there was no follow up and that Williams was never informed of the results of any further investigation.

In July 2019, Williams alleges that Kelley began to re-engage in the operations of the company and “took a series of retaliatory actions against Williams to try to force her to contact him.” The actions, the suit alleges, included removing her access to the company’s computer system, email account and social media accounts.

In September 2019 Williams filed a complaint with the Equal Employment Opportunity Commission charging sex discrimination and retaliation.

After that, the retaliation escalated, according to the lawsuit.

In November, she was told her store would be temporarily closed because it had lost its ABC license and then the following month the store was closed permanently and Williams was fired, she alleges.

She claims she requested jobs at other Sugar Shack locations that were hiring but she was turned down and later learned that Kelley had told managers not to hire her.

The case has been assigned to U.S. District Judge Robert E. Payne. Williams is asking for a jury trial.

The suit is seeking $200,000 in compensatory and punitive damages for the alleged sexual harassment and retaliation allegations, plus back pay still owed her as well as $350,000 in punitive damages for wrongful discharge.