Talked to the lawyer again today. Looks like everything is going to be ok!
There is some little known section of the law that allows us to do exactly what we're doing. And we may have some unknown agreements in place that further reinforce the companies position.
This is apparently a really unknown section of the law if three lawyers didn't know about it! And I really think there should be a binder in HR with these "unknown" agreements in it so the HR Manager knows how to manage!
The final verdict is still to come but it looks like things are going to be ok and I'm not going to be in the dog house! Yeah!
Thank you everyone for your concern. I really appreciated the support! I'm very glad this was a short-lived crisis!