Legal Question in Employment Law in California

The key question is whether you are able to perform the essential functions of your position, with or without reasonable accommodation, due to your mental state. If you are not, the demotion can be justified.

There needs to be some dialogue between you and your employer about what they can do to help you do your job. If they refuse to discuss it or demote you due to your depression, without regard to any accommodation that may be available, they could be liable for disability discrimination. But it is incumbent on you to advise them of the nature of your condition and how it can be remedied, i.e. medication, increased rest breaks, etc. Asking to be free of stress won't help.

You may also have a workers compensation claim. You will have to discuss this with an attorney who specializes in plaintiffs' workers comp. cases for an opinion as to whether this is a viable option.

If you can somehow prove 'failure to accommodate' your 'disability', then you may have a case under the discrimination laws. However, if you 'filed' a disability claim under the WCAB system, any retaliation claim can be brought only there as well.

2nd part answer:

If you contend your age is a factor in 'discrimination', and have any evidence to prove that, then that is another basis for a case under the discrimination laws.