Manager Joe Maddon announced the decision Saturday.
The 24-year-old Happ appeared in 142 games with Chicago last season, hitting .233 with 15 homers and a .761 OPS while playing second base, third base and all three outfield spots. He finished eighth in NL Rookie of the Year voting in 2017 after hitting .253 with 24 homers in 115 games.
The 2015 first-round pick is batting .135 this spring with a .389 OPS. The demotion will allow the switch hitter to get regular playing time at Triple-A instead of being limited on Chicago's deep major league roster.
Right-handers Alec Mills and Dillon Maples and catcher Taylor Davis were also optioned to Triple-A Iowa, and righty Junichi Tazawa was granted his release. Infielder Cristhian Adames and outfielder Johnny Field were re-assigned to minor league camp.
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