I called up USCIS customer service regarding same. They informed me that if the EAD renewal is currently pending and you have the receipt for it, you are eligible to work.
After some reasearch, I found following:-
M-274 (
http://www.uscis.gov/files/nativedocuments/m-274.pdf)
Instruction for Completing Form I-9
(Employment Eligibility Verification Form)
Page 20 (page 22 of pdf) seem to suggest same.
Text reads as follows:-
"
Part Eight
Acceptable Documents for verifying Employment Eligibility.
To establish both identity and employment eligibility, a person can present a Passport,Alien Registration Card, or one of the other documents from List A.
.....
If a person is unable to present the required document(s) within 3 business days of the date employment begins, he or she must present (within 3 business days) a
receipt showing that he or she has applied for the document. The person then must
present the actual document within 90 days of the date of employment begins. The person must have indicated
on or before the time employment began, by having checked an appropriate box in Section 1, the he or she is already eligible to be employed in United States.
List A
* Unexpired Employment Authorization Card (INS Form I-688A)"