In terms of the employee viewpoint, this solution would probably be easier for George to implement, as only Paula's potential resentment will have to be handled, rather than the resentment of multiple employees. In addition to a penalty system, it could also be a good idea to implement a reward system for excellence in performance. This would encourage employees to perform to the best of their ability while reducing any resentment as related to race or unfair treatment.

Implementation

Although more costly in terms of financial investment, the solution of transport is chosen as the best option in terms of the least disruption. Furthermore, the advantage is that the transport solution can be implemented for other workers who also face Paula's situation. This would improve the company's image as one that is concerned with offering viable solutions for single parents, as well as one that offers equal opportunities for workers from all sectors of life.

To implement...

The transport solution should be offered to her free of charge. She should also be able to make any objections to this solution before its implementation. If found to work well, the rest of the employees with children should also be allowed to use this option. It is projected that this solution is the best of possible ways to address the root cause of Paula's tardiness.
References

BusinessTown.com. (2003). Problem Employees: Tardiness. Retrieved from http://www.businesstown.com/people/employees-tardy.asp

Hicks, Tim. (2010). Seven Steps for Effective Problem Solving in the Workplace. Retrieved from http://www.mediate.com/articles/thicks.cfm

Stern, Gary M. (2010). Dealing with the Chronically Lat Employee. Penton Media, Inc., Retrieved from http://smallbusinessreview.com/human_resources/dealing-with-tardiness/