Shares of Uber Technologies (UBER) were rising Monday morning after a Dutch court ruled that the company's drivers are employees and not contractors.
The ruling means that Uber drivers are entitled to greater workers' rights under local labor laws, which could be a setback for the U.S. company's operations in Europe.
An Amsterdam district court ruled in favor of the Federation of Dutch Trade Unions, which argued that Uber's nearly 4,000 drivers in the Dutch capital should be granted benefits in line with taxi sector employees, Reuters reported.
Uber said it will appeal the decision and that it "has no plans to employ drivers in the Netherlands."
"We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent," said Maurits Schönfeld, Uber's general manager for northern Europe, said in a statement. "Drivers don’t want to give up their freedom to choose if, when and where to work."
The business model for Uber, and other ride hailing services like Lyft, has been challenged in court's across the world.
Last month, a California court invalidated a gig worker ballot initiative that had been championed by Uber and Lyft.
Alameda County Superior Court Judge Frank Roesch said late Friday that the 2020 decision known as Proposition 22-- which received 58% voter support -- was unconstitutional as it "limits the power of a future legislature to define app-based drivers as workers subject to workers' compensation law."
Uber shares Monday rose 2.6% to $40.95 at last check.