Uber Technologies Inc. and Lyft Inc. face the gravest threat yet to their business models after an appeals court ruled they must treat their drivers in California as employees instead of independent contractors.

Autonomous driving engineer Anthony Levandowski was ordered to spend 18 months in prison for stealing trade secrets from Google as he defected to Uber Technologies Inc., in one of the highest-profile criminal cases to hit Silicon Valley.

Uber Technologies Inc. is trying to duck a California lawsuit that threatens to upend its business model — by pointing a finger at Lyft Inc.