I absolutely understand what you mean. I am assuming that you don't have any in-house legal staff. I am also assuming that your employer does use the services of a lawyer, but only when he requires it, and he is unwilling to spend money on a lawyer well versed in business law and practices.
Are you a member of SHRM? That is a nationwide group for Human Resource Professionals. It is a group well worth joining. It will enable you to network with people in the same field as you are in. You have a very good chance of finding people who have had to deal with the same issues and have managed to resolve them. They are usually more than willing to share their knowledge with a colleague. They have at least one chapter in most states in the U.S. There is also a help section on their website:
SHRM
Here is a link to another HR site that has a Q&A & a Blog that will connect you to other HR professionals. You might find them helpful
http://www.hr.com/servlets/sfs?i=111...0Professionals
Here is a link to a HR group in Northern California that you also might be able to get help from:
Northern California HR Association - Anonymous
If you require a completely free resource for legal advice, I would strongly suggest starting with the State Labor Board's legal services division. See what you can pry out of them for suggestions on handling this.
If you don't get anywhere, unfortunately the sad fact is, that your boss is going to have to shell out the money to hire an attorney licensed by the State of California, who is well versed in Business Law. Explain to him that you have availed yourself of all the free resources you possibly can and have not been able to get the help you require in resolving this potentially costly issue. Tell him that the cost of the legal fees involved to aid you in avoiding a lawsuit will be peanuts compared to the cost of defending a lawsuit and losing. With that, he might be more amenable to allowing you to spend the money. Good advice to head off a potential disaster really is priceless. The attorney can help you rewrite your Employee Handbook/Corporate policy (or put one in place if you don't have one), and will provide you with a standardized corporate "response" to these people. It might only cost a few hours of a good attorney's time.
I wish you the best of luck! If you get a chance to stop back, I am very curious as to how you were able to resolve this.