Is removing a link underline on hover not WCAG compliant?

I'm trying to find a definitive answer to this accessibility question. If I set the underline on all links by default...

a {
    text-decoration: underline;
}

...and remove the underline on hover...

a:hover {
    text-decoration: none;
}

...is this no longer WCAG 2.0 compliant?

There's a bit of gray area with the W3C's Success Criterion. Per "Failure of Success Criterion 1.4.1 due to creating links that are not visually evident without color vision":

Link underlines or some other non-color visual distinction are required (when the links are discernible to those with color vision).

We know that a link with default styling that doesn't include an underline fails the success criterion even if the underline is applied on hover. Because as stated above, "other non-color visual distinction are required". Is the same true in reverse?

I've seen a few accessibility tools (e.g., SiteImprove) flag the lack of underline on hover even when it's present for default styling. Does anyone know definitively what the answer is?

@graham is spot on but a few other things to consider that can't fit into a comment area.

Bear in mind that you don't have to underline links. You just have to make them visually identifiable with something other than just colour.

You don't necessarily have to distinguish with more than color if the links are all by themselves. It's usually only a problem if you have links embedded in a paragraph with plain text. Then you need to make sure the links look different from other text besides using just color.

Likewise with your comment:

We know that a link with default styling that doesn't include an underline fails the success criterion even if the underline is applied on hover.

We actually don't know that it fails the success criterion. It depends on the context and design as I'll explain below.

An important part of accessibility with regards to WCAG is to understand that documentation/specs can be normative or non-normative (the latter is also called informative).

Normative is required for conformance and non-normative/informative is not. However, non-normative is usually pretty good advice (best practice) so it's often a good idea to follow it, but not following it doesn't mean you're not conformant to WCAG.

See "5.1 Interpreting Normative Requirements":

The main content of WCAG 2.1 is normative and defines requirements that impact conformance claims. Introductory material, appendices, sections marked as "non-normative", diagrams, examples, and notes are informative (non-normative). Non-normative material provides advisory information to help interpret the guidelines but does not create requirements that impact a conformance claim.

As an example, the intro section of WCAG says it's non-normative.

The failure you quoted, F73, is non-normative. Even if you have that pattern, "links that are not visually evident without color vision", that doesn't mean you necessarily fail WCAG. It goes back to my first comment about links by themselves. F73 even mentions that:

While some links may be visually evident from page design and context, such as navigational links, links within text are often visually understood only from their own display attributes.

In other words, it depends on the design.

As an example, look at https://webaim.org/. The paragraph text color is black. "The results of WebAIM's...".

There's a link below the text that is blue and underlined which is a typical practice but ignore that link for now. Just note that the paragraph text is black.

Near the top of the page is a list of navigation links. They are black too.

So now there is plain text that is black and links that are black and when looking at just color, you can't tell the difference. However, the design of the page makes it apparent that the text at the top are links so it wouldn't fail 1.4.1 or F73.

Even though this doesn't fail, WebAIM still has a hover and focus state that changes the color of the link and they have a slight shadow when hovered and focused. That makes for a better user experience but isn't necessarily needed for WCAG.

All that being said, you are ok if you remove the underline upon hover with regards to WCAG conformance but you should still ask yourself is it's a good user experience.