Her lawyer is, um, uninformed. Although California law appears to allow comp time for private employers, federal law does not, so federal law wins.
Yes, nonexempt is nonexempt and the overtime rules apply, regardless of the pay method. There are arcane exceptions in federal law (basically, the fluctuating workweek method, and Belo plans), but my understanding is that California prohibits those.
They can switch you to hourly without your approval, but it doesn't change the overtime situation. Remaining "salaried" as long as you are still nonexempt, doesn't change anything legally.
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You have not won the law suit lottery; in fact, you haven't even won the law suit scratch-off.