Legal Question in Employment Law in Washington

First, it is possible that you are both salaried and exempt. However, just because you are salaried does not mean you are also exempt. Being exempt depends on your job description, not how you are paid.

In this case, whether or not you are exempt, what the employer has done is probably legal. Overtime laws kick in (provided you are not exempt) when your working hours exceed 40 per week. What your employer has done is cut everyone's pay by 20%. If you do not have a contract or a collective bargaining agreement that prevents that, it is probably okay (subject to my comments below).

I do wonder, though, why they are giving you the story about paying you for 32 hours and working you for 40, instead of simply telling you that pay will be cut by 20%. If they only report that you are working 32 hours for purposes of L & I taxes, qualifying for insurance benefits, and so forth, but actually make you work 40, that would be illegal.