I see. Thank you. First of all, you need to understand that California is an "at will" employment state. At-will employment means that without a contract, you have no contractual or other right to employment with the company. The company is entitled to fire you for any reason: a good reason, a poor reason, or no reason at all--as long as the company does not fire you for an illegal reason (race, gender, age, religion, etc...). But it extends beyond firing, to hiring, promotions, demotions, wage cuts and raises, disciplinary actions, and even scheduling. Unless you can show that this was done in violation of a contract, union agreement, or a clear violation of an unambiguous and binding clause against the employer, or that it was done because of some minority status (age, race, gender, religion, disability) that you have, then they do have this discretion.
Now "exempt" means exempt from provisions of the Fair Labor Standards Act (FLSA) including minimum wage and overtime. Only in certain situations can an employer designate someone as exempt, because doing so reduces a worker's rights. An employer can designate ANY employee as nonexempt. The law allows this because this affords the employee more rights than an exempt employee. So in short, yes, this is legal. Going from nonexempt to exempt might not be, but the other way around certainly is.
I know this is probably not what you wanted to hear, but it is the law. I hope that clears things up anyway. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for the time and effort that I spent on this answer unless and until you rate it positively (good or better). Thank you, ***** ***** luck to you!