Unless your wife has an employment contract which protects her job, title, pay, etc., it is not illegal. Without an employment contract, all employent is employment at will. Among other things, employment at will means that an employee can be demoted at any time, for any reason which is not illegal discrimination. Only a few things are considered illegal discrimination, such as taking negative action against an employee due to his/her race, sex, religion, age over 40, or disability. However, the law does not protect people who are going back to school or seeking a degree or certification: therefore, an employer may demote someone doing this because he is worried that the employee will be less devoted to her job because of the outside interest, or even just out of spite or jealousy that the employee is trying to better herself or her life.