Here is some explanation:
The illegal stay was from 1994-1997. Since then the dependant has exited and re-entered on H-4s and APs. The employment were odd jobs here and there during the illegal stay.
The RFE was specifically for status inquiry up until 1997. RFE said that if evidence cannot be provided for legal status, a supplement along with $1000 should be filed.
Now the question, on the supplement, should the 'Accepted employment without authorization' option be checked along with overstay option?
Different attorneys, different stories:
2 of them say that the employment option should be checked as well as 245(i) protects against illegal work as well.
1 attorney says that there is no reason to file the supplement as the illegal stays did not total more than 180 days since April 1, 1997 and subsequent H4 and AP entries have corrected past status issues.
My attorney says that we can argue the above point with USCIS but it will cost more than a $1000 and un-necessary delays as well and there is a possibility of denial which would require appeals.
We have decided to go with the supplement and the $1000 fee with both the options checked, i.e. illegal stay and un-authorized employment and then hope for the best and put our faith in God that what ever happens, happens for the best.