It is the company's lawyer who messed up the situation.
Under certain circumstances, an alien can still file COS after being out of status. So what you need to do now is:
1) send all copies of paychecks from July to November and explain that your hu*****and was still in H-1b status during that period. It is better for your hu*****and's former employer to issue a letter to confirm this.
2) As an alternative, you should explain that it is not your fault of not timely filing COS (agree with USCIS that your ha*****and was out of status) because you relied on the facts of being continuously paid by the company.
You need carefully prepare your asnwers, better to get a help from a lawyer.