Washington, D.C. – Congressman Erik Paulsen (MN-03) has introduced legislation in the U.S. House of Representatives to promote employee ownership at startup companies and encourage innovation. The Empowering Employees through Stock Ownership Act (H.R. 5719) helps employees keep their ownership interests and utilize all options offered to them when taking a new and exciting job at a startup. Identical legislation was also introduced in the U.S. Senate by Senators Mark Warner (D-VA) and Dean Heller (R-NV).

At many startup companies, employees are offered stock options or equity interest as part of their compensation. Currently, if employees exercise these options, they are required to immediately pay taxes often times before they may have the available cash to do so. As a result, these rank-and-file employees cannot afford to exercise their stock options and therefore miss out on a significant financial opportunity. This is a deterrent to many that wish to join a startup company. The Empowering Employees through Stock Ownership Act will help startup companies attract and keep top talent by allowing employees to defer the taxes on their stock options until they are likely to have the funds necessary to make their tax payment.

“This bipartisan legislation will grow startup small businesses by helping make these jobs more attractive to top talent and empowering their employees,” said Paulsen. “Startups and small businesses are the lifeblood of the American economy, and this commonsense fix will accelerate entrepreneurship and innovation.”

Paulsen, a champion of small business and advocate of free enterprise, entrepreneurship, and innovation, serves on the House Ways and Means Committee, the bicameral Joint Economic Committee, and is co-chair of the Congressional Medical Technology Caucus.

For complete text of the bill, click here.

For more information on Congressman Paulsen’s work in Congress visit Paulsen.house.gov.

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