Construction Accounting Article -
PPE Should Be on Employers’ Dime, OSHA Says

Target Audience: Construction Industry Professionals, Contractors, Construction Business Owners, Construction Accountant Interest, Construction Management, OSHA Standards Interest, Personal Protective Equipment (PPE) Standards Interest

It’s a decision the Occupational Safety and Health Administration (OSHA) says could prevent thousands of work-related injuries each year. That is, the agency now requires employers to provide employees with virtually all of their personal protective equipment (PPE), such as hard hats and nonprescription safety goggles.

If you buy PPE, OSHA says, employees are more likely to have the right gear in good condition, and they’ll be more inclined to use it.

What’s the Deal?

The new rule is intended to add consistency regarding PPE across both companies and industries. But the rule doesn’t really change what PPE you must provide; it just requires that you pay for the PPE you use to comply with OSHA regulations.

There are some exceptions: You aren’t required to pay for steel-toed boots, prescription safety glasses or clothing used solely for weather protection (such as winter coats) or to protect against dirt (for example, overalls).

The rule also gives you some leeway in how you provide the PPE. Your options include:

• Buying and distributing the equipment yourself,
• Giving employees pay advances to buy their own equipment,
• Reimbursing employees for the cost of equipment after they buy it, or
• Negotiating with a supplier to accept vouchers in lieu of cash (and bill you later)

There are advantages to each approach, but vouchers may be the most convenient administratively, and they keep cash out of the cycle. If you choose to give employees advances, be sure they return any excess money. Otherwise, you’ll have to report the overages as wages.

Anything Else?

One issue of particular concern to contractors is employee mobility. Construction workers often move among job sites — not to mention among jobs.

You aren’t required to replace PPE if an employee loses or intentionally damages it, but you are required to make sure every employee starts out with the proper equipment. And that includes transitory, temporary and part-time workers.

You can require employees to turn in their PPE when they leave the company. After all, if they don’t, you’ll have to buy more for the next person. You may even take steps to retrieve missing equipment or require the departing employee to pay for it.

For accounting purposes, PPE is a business expense that you’ll include in your overhead. As with any expense, how you recognize it depends on the accounting method you use. If you use the cash method, you may recognize expenses as you incur them.

If, like most contractors, you use the accrual method, how you recognize expenses will depend on whether yours is a small or large business, whether your projects are short- or long-term, and whether your projects are home construction or general construction. If you’re not sure which method is right for you, consult your Masssachusetts accounting consultants or MA, NH, RI area CPA firm.

Has Anything Really Changed?

As OSHA notes, most contractors already pay for PPE most of the time. If this is true for your company, nothing has really changed. Nonetheless, the final rule became effective on Feb. 13, 2008, and companies were due to implement it by May 15. So, if you’re not in compliance, take steps to abide by the rule immediately.

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