My company has reclassified certain managers as hourly employees based on some unexplained California law(I'm employed in New Jersey).
A. What could possibly be their rationale?
B. As an hourly employee is my company legally required to allow me lunch breaks?

If you are in New Jersey you are under NJ law not California law, so you have to look at the laws and rules for managers in NJ not California.

Now a company can reclassify you and change you pay and your benfits anytime they want for really no reason. And they can always change you to hourly, but can not change you to salary and management unless you meet the rules of the state you are working in.

They may be planning on paying you less, taking away some of the benefits. I am not up on NJ law, but normally yes, you are required to take certain breaks after so many hours pay. Lunch will nromally be non paid. So if you start work at 8am and end at 5 pm and take a hour lunch, you get 8 hours pay.