What action should I take if my boss has "suggested" a demotion due to a recent disability diagnosis?

My answer is a little less detailed than the others. I suggest you contact the fair labor board in your area and give them the details. Although they have basically threatened to demote you because of the disability, it may not be against the law because they still need to have the position filled and done by someone who can complete the tasks. Now, if at one time or another someone had worked that same position with the hours you had asked for, that is in your favor. I wouldnt suggest recording conversations since this is typically against the law unles you have permission from the person you are recording (check your specific state laws on this).