I am on a H-1B visa (valid till 01/11) but my I-129 has been taken into review for reconsideration by the USCIS since my employer terminated my employment in 12/08. I believe my employment was wrongfully terminated and am considering pursuing legal action against my employer.
My question is - how does that impact my H-1B status? Can/Would I get an extension of stay while I settle the law suit? If so, for how long and what do I do to get it?
Sorry to hear you are going through this. You need to seek the advice of an attorney concerning your situation - and a different one than the one who handled the H-1b originally, since that attorney (thought they likely have done nothing wrong) has a conflict. This is because they have also represented the company from which you just separated for the purpose of obtaining the H-1B, as well as you.
It isn't clear to me exactly what you mean when you say that USCIS has taken the H-1B "into review." The act of terminating you by your former employer - even if under circumstances to which you object - will not normally be enough to cause an investigation, and often investigations are undertaken by the Department of Labor rather than USCIS where fraud is suspected. I would need more details.
I can tell you that technically, the H-1B is no longer considered to be valid in the sense of keeping you in valid status as soon as you stop working for the sponsor/employer - regardless of whether they were right to terminate you. As a practical matter however, USCIS will often accept a pay statement dated within the last 30 days submitted along with a request to change status or switch employers on the H-1B as sufficient evidence of maintenance of status.
The only way to continue your H-1B would be to switch to another H-1B employer if you can get a job offer and sponsorship. Barring that, you really aren't eligible for an H-1B any longer.
So, the other option is to switch to some other nonimmigrant visa for which you would be eligible. You might be able to justify switching to a B-1/B-2 visitor visa to remain here to wrap up personal business pertaining to any lawsuit; alternatively, you could enroll in school or some type of training program and try to switch to an F-1 student, H-3 Trainee, or J-1 Exchange Visitor visa.
There may be other options - speak with an attorney about your own situation to get a more accurate picture of what might be available to you.