The 180 day grace period is granted by 245 (k) which allows an employment based case to have a combined total of 180 days out of status and unauthorized employment since their last admission to the USA before submitting the I-485.
Beyond that, the person becomes ineligible to adjust status in the USA and must Consular Process their immigrant application.
There is a memo about it here http://www.immigration.com/sites/def...29_14Jul08.pdf
I hope that helps