The standard clearly states:
1910.132(h)(5)
The employer must pay for replacement PPE, except when the employee has lost or intentionally damaged the PPE.
Just make sure you treat everyone the same, if one loses it and the company pays, then the next person who loses it should also get the same treatment. I would also think it would depend on what the PPE is and how long they had had it. If it is something that they have had for five years and probably needed replacing anyway, maybe the company should pay. If they had the PPE for a few days, then the employee pays for it. Doing it this way would require a written policy on each PPE and length of time before the company would pay for a replacement.
Or you could just stick to the OSHA rule and say, "you lost it, you pay for it and you can not work without it."
Safety Management '82
Indiana State Univ.