Is mulch dangerous to work with?

Rob, your mate is a menace. Where did he get the "stuff" from? Mulch is just a term for any material applied to the surface of soil to conserve moisture and/or add nutrients.

Legionaires disease is caught by inhaling the bugs from moisture laden air, it is found living in the water tanks of air conditioning units on top of buildings. As your 'stuff' was dry I think you can strike that one off the list.

Cheers, Tony.

I think................You need a new mate Rob!

But if there were parrot or pigeon droppings in there you may be at risk of psittacosis

With mates like that one Rob, it's a good job you've found mates on here!

Don't frighten him

It is a rare illness. Figures from the Health Protection Agency (HPA) indicate that there were about 500 reported cases in the UK in the mid 1990s, decreasing to about 100 annually in recent years. There were 59 cases in 2005 [because of better hygiene practise amongst poultry workers, and the decline of and quarantine of imported wild parrots to the pet trade ~ most, if not all, pet parrots are UK reared] Psittacosis | Doctor | Patient UK

In England and Wales in 2008, there were 61 laboratory confirmed human respiratory infections
with C. psittaci, compared with 38 in 2007 [a number of cases were found in migrant workers; the disease isn't transmissable from human to human]

Rob, life is dangerous. There are all sorts of risks all over the place. You just need to take sensible precautions. I don't always wear gloves when gardening, but I do make sure I wash my hands thoroughly when I've finished and before I make a cuppa or have something to eat. I certainly haven't considered wearing a face mask when handling compost or grass clippings, even though I suffer from hay fever. Stop worrying so much and enjoy your gardening.

We're almost at the stage where you're going to ask, if your mate puts his hand in the fire, should you too.....
and overhyped, otherwise there's be a lot of dead gardeners....

Fair question Rob, this is a question I need to ask when gardening, as a volunteer project leader on NTS properties. In very broad terms your mate was right...kind of...in very broad terms. In detail he was wrong - it is as kleftiwallah says.
As a compost heap breaks down, fungi build up within the heap, and if you then use that as a mulch, you may need to be careful when shifting it. Quite simply, anytime you see a white powdery dust coming off any mouldy organic debris, you want to not breathe that dust in, it is spores which may cause bronchial irritation and longer term health problems.
But that is only going to happen if the material is very dry and the fungus is ready to reproduce - an active compost heap is usually moister than that. And most of the time, the fungi that you see will not be the sort that can harm, (Aspergillus is the one that springs to mind, although there are others). So the risk (ie the chance of harm) is really very low, and I'd consider this a low to medium level of hazard ( ie the type of harm) in most cases. There are two exceptions; those with compromised immune systems, and some people who have a genetic predisposition to bronchial infections, who would be more prone to damage.
Mildew on your windowsill is more dangerous, generally, because it is chronic exposure over a long time. Health Risks Of Mildew | LIVESTRONG.COM

I think I see what your mate was getting at !

http://http://www.dailymail.co.uk/he...-Scotland.html

But it's not really Legionnaire's Disease...science is not the Daily Mail's strong point, attention grabbing headlines are. This is a rare, and less serious, form of pneumonia caused by a bacterium that just happens to belong to the same family as the one causing Legionnaire's Disease. There are probably thousands of different species of Legionella, just as there are thousands of men named Tom...all living in different places, with different habits.