"Open for time entry" at resource level is not a time-scaled value, its just ON or OFF, so switching it ON/OFF is not going to do what you describe in your 3 scenarios.
Rather rhe consultants "expected hours" varies in the situations you describe; so I think that should be controlled by the resources "availability" (between (eg) 8hrs a day and 0 hours a day - controlled in teh resource calendar for example) and not just their "open/closed" for time entry attribute. Clarity can report on overbooking against availabilty and such things so you can see where resources have overbooked (eg submitted timesheets for periods where you dont expect time) - but your business processes must be set up to be interested in that.
So, answers (maybe? ;-) )
[color=#26E11B]1) I believe the timesheets are created based on the hire date of the resource. If the hire date is NULL or Blank, clarity creates back time periods. How do we prevent this?[color]
(Be careful with your terminology, you are mixing "timesheets for a time period" and "time periods" a little bit here)
But, timesheets are never automatically CREATED based on any of these settings; what the settings control is the potential to create a timesheet for the resource - the timesheets screen might well show on "Open" timesheet for a resource/period but until someone has actually clicked into that timesheet entry, then the timesheet DOES NOT EXIST.
"How can you prevent this"... I do understand what you are trying to prevent (preventing entry of a timesheet for a period when the resource is not actually working for you), I'm not sure that there is a way to do that as such (beyong controlling resource availability like I mention above).
[color=#26E11B]2) Turned the time entry OFF for some time and turned it back ON creates all back time periods. We had to re-open the time period, submit zero timesheet and close the time periods for timesheet compliance and reporting. How do we handle this situation?[color]
Again, NOTHING is being CREATED when you turn the resource back on, just the potential to create a timesheet... submitting a zero timsheet for the period you don't want the resource to book to is a good idea; but nothing stops the resource ADJUSTING that zero timesheet to something else, so I dont think you are actually achieving anything with that?
[color=#26E11B]3) If a resource is active then timesheet must be submitted either zero hours or actual hours until the resource is set to inactive. Is this TRUE?[color]
"MUST BE" - you tell me? The Clarity system doesn't enforce this so if you think you "must" submit a timesheet then that is YOUR business process decision!
i.e. Nothing stops me submitting timesheets for later periods, leaving earlier periods unentered.... your "business rules" might differ, but Clarity isn't making you do anything for those periods; i.e. you only have to fill in the timesheet for the peroids you need to capture the actuals for!
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In summary; this shouldn't be a problem for you; just get people to fill in timesheets for the time they are working (no kidding!) and tell Clarity what time you are expectiving for the resource (availability) and thats it!
(phew, thats a but of a ramble)