Keep the hyphen in the last name when you cite the author or include them in the reference list. Do not shorten it.
Place a single last name before a hyphenated last name, even if the first-name initials of the single last name come after the initials of the second last name in the alphabet. APA says to "remember that 'nothing precedes something.'" It notes that a name like "Girard, J.-B." comes before "Girard-Perregaux, A. S."
Treat the whole hyphenated last name as if it were two separate names when alphabetizing. APA notes that "Villafuerte" comes before "Villa-Lobos."
Cite in-text a hyphenated last name as you would any other reference, but leave out suffixes.
Abbreviate and hyphenate the initials if the author has a two-part, hyphenated first name in both in-text citations and in the references. APA gives the examples of "V.-G. Nguyen" in-text and "Girard, J.-B." in the reference list. Note that this is for first names that are hyphenated by the author; don't hyphenate a first and middle name combination that is normally not hyphenated.