Dan Bobinski's Answer:
For jobs that require people to be on station at certain times, misuse of the time clock is best met with a reading of the rules found in your company's employee manual - along with the consequences of breaking those rules. So if your company doesn't have an employee manual, now is a perfect time to create one.
Here's the big question from the Department of Labor's point of view: Is the employee aware of company rules and the consequences of breaking them? You can't not pay someone just because they don't clock in or out, but you can impose a progressive discipline policy for not doing so: First violation = verbal warning; Second violation = written warning; etc.
If your policies aren't in writing, put pen to paper. Then have everyone sign that they've read and understand the rules and the consequences of breaking them.
The key to success is consistency. No favorites. No exceptions. No delays. If you delay enforcing your policies, employees can argue you're not consistent. Example: If an employee doesn't clock out for lunch, he gets warned/suspended/or fired upon his return that afternoon, depending on where he's at in the process. Don't wait until the next day.
I read you want to be fair. I'd recommend you be fair in the sense that everyone must follow the rules. And, with each violation, make sure the person is aware of the next progressive discipline step.
Simply stated, have rules, have employees aware of the rules, and enforce the rules. Nothing is fairer than that.
But - after saying all that, if applicable, you might consider scrapping the time clock altogether and opting for a Results-Only Work Environment (Take a look at www.culturerx.com). This work model requires difficult conversations about expectations, but it can pay off big time.
What I like about it is the focus on results, not on watching a clock.
Still, some jobs require timeliness for people being on station. So if the jobs you talk about fall into that category, then a solid time-clock policy most certainly applies!