As a Pennsylvania hospitality business owner, staying compliant with evolving laws is critical to your success in 2025. From wage and hour laws for tipped employees to the Corporate Transparency Act and bankruptcy considerations, this guide covers essential updates to protect your business.
1. Off-Premises Liquor Catering Permits
Effective January 1, 2025, Act 51 of 2023 introduces significant changes to Pennsylvania’s Off-Premises Catering Permit (OPCP), enhancing opportunities for hospitality businesses to offer services beyond their primary locations.[1]
Key Changes Under Act 51:
- Unlimited Events: Licensees can host an unlimited number of off-premises catered functions annually, removing the previous cap of 52 events per year.
- Extended Event Duration: Each catered function can now last up to six hours per day, an increase from the prior five-hour limit.
- Flexible Application Timing: The March 1 application deadline is eliminated, allowing licensees to apply for the OPCP at any time during the year.
- Application Fee: Starting January 1, 2025, an annual application fee of $500 will be reinstated for the OPCP.
Action Item: Plan your event calendar and apply for the OPCP early to take full advantage of these expanded opportunities. Submit your application at least 60 days before your first catered event to ensure timely approval. Ensure staff certifications and compliance measures are in place to meet the new requirements.
2. Wage and Hour Laws: Increased Scrutiny on Tipped Employees
In 2024, Pennsylvania experienced heightened enforcement regarding tipped employees, focusing on tip pooling, minimum wage compliance, and misclassification. For instance, a Wilkes-Barre restaurant was ordered to pay $1.3 million in back wages and damages for improperly distributing tips, violating the Fair Labor Standards Act (FLSA) and Pennsylvania Minimum Wage Act.[2]
What You Need to Know for 2025:
- Ensure Compliance: Review your tip pooling policies to align with state and federal laws.
- Audit Payroll Practices: Regularly check payroll to prevent misclassification claims.
- Manager Training: Educate managers on proper record-keeping to avoid wage disputes.
Action Item: Consult with employment legal counsel to review your employee handbook and payroll systems for compliance.
3. Corporate Transparency Act: New Reporting Requirements
The Corporate Transparency Act (CTA) requires businesses to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).[3] However, mandatory CTA reporting is on hold for the time being.[4]
Reporting Deadlines:
- Companies created before January 1, 2024, have until January 13, 2025, to file initial reports.
- Entities created on or after January 1, 2025, must file within 90 days of formation.
- Penalties for Non-Compliance: Civil penalties up to $500 per day and criminal penalties up to $10,000 and two years in prison.
Action Item: Identify your beneficial owners and gather required information. Consult with legal counsel to ensure timely and accurate filing. Voluntary reporting is allowed despite the injunction against enforcement of the CTA.
4. Pennsylvania Annual Report Requirement
In addition to FinCEN’s beneficial ownership, starting in 2024, Pennsylvania businesses are required to submit an annual report to the state.
What You Need to Know for 2025:
- Filing Fee: $7, with reports submitted online.
- Deadlines: Vary by business type; for LLCs, January 1 – September 30.
Action Item: Mark your calendar with the appropriate filing deadline and file your annual report online to ensure compliance.
5. Food and Beverage and Hotel Bankruptcies: Navigating Financial Challenges
The hospitality industry continues to face financial pressures, including rising operational costs, labor shortages, and changing consumer preferences. In 2024, several high-profile food and beverage businesses and hotels filed for bankruptcy. The most significant casual restaurant Chapter 11 bankruptcy last year was Red Lobster’s filing on May 19, 2024. Others include Rubio’s Coastal Grill, citing high wages and fewer customers, and Buca di Beppo, which is restructuring after closing several restaurants and dealing with staffing issues.
These cases highlight the importance of proactive financial planning and understanding bankruptcy options.
What You Need to Know for 2025:
- Chapter 11 Bankruptcy: Allows businesses to reorganize debts and continue operations while developing a repayment plan.
- Chapter 7 Bankruptcy: Involves liquidating assets to pay off creditors, typically leading to the closure of the business.
- Out-of-Court Workouts: Negotiating directly with creditors to restructure debts without filing for bankruptcy.
Action Item: If your business is facing financial distress, consult a bankruptcy attorney as soon as possible to explore your options and protect your interests.[5]
[1] Pennsylvania Changed the Off-Premises Catering Permit Under Act 51 of 2023 – Tucker Arensberg, P.C.
[2] US Department of Labor obtains judgment ordering Pennsylvania restaurant, owner to pay $1.3M in back wages, withheld tips, liquidated damages | U.S. Department of Labor
[3] UPDATE: Corporate Transparency Act (“CTA”) Enforcement Once Again On Hold – Tucker Arensberg, P.C.
[4] Texas Top Cop Shop, Inc. v. Garland, No. 24-40792 (5th Cir. Dec. 26, 2024)
[5] Different Types of Bankruptcy Relief, Pros & Cons, and More – Tucker Arensberg, P.C.
