(CNN) -- Ohio voters will repeal a controversial law Tuesday limiting the collective-bargaining rights of public workers, CNN projects based on reported results.
With 28% of precincts reporting, 62% of people voted for repealing the law, while 38% voted to keep it, according to the office of the Ohio Secretary of State.
The measure was a referendum on state Senate bill 5, the latest in a showdown between union groups, business leaders and lawmakers over the ways state governments negotiate with their employees. It was seen as a barometer for next year's general election in the key battleground state.
The bill passed the Republican-controlled state legislature in March and would have limited the bargaining rights of public workers -- including police, teachers and firefighters -- to salaries, workplace conditions and hours.
"Tonight Ohioans have spoken, and spoken freely," said Courtney Johnson, a teacher in Hilliard, Ohio, who spoke at an election night rally. "We don't turn our backs on the people who watch ours."
The law would have also prohibited strikes and promotions based exclusively on seniority, and required public employees to contribute at least 10% of their income toward their pensions. It would have required workers to cover at least 15% of their own health care premiums.
Republican Gov. John Kasich signed the measure into law in March, but it was held from going into effect pending the results of the referendum.
On Tuesday, he congratulated his opposition.
"It's clear that the people have spoken," the governor said. "Part of leading is listening to and hearing what people have to say to you."
Wisconsin passed a similar measure in March, igniting a firestorm of political activism that drew thousands to the state capital in protest.
In perhaps the most visible confrontation of a debate being played out in states including New Jersey, Michigan and Indiana, Wisconsin Gov. Scott Walker's controversial bill pitted unionized labor against statehouse Republicans and raised broader questions about the long-term fiscal health of state and local governments.
Since then, activists in Wisconsin and Ohio have collected thousands of signatures in a bid to pressure state lawmakers into overturning the bargaining restrictions.
"Unlike Ohio, Wisconsin workers do not have the opportunity to put a referendum on the ballot. Thankfully we have the right to recall. Today's win in Ohio has energized and excited Wisconsin workers to recall Gov. Walker and put a stop to his attack on working families," Phil Neuenfeldt, president of the Wisconsin state American Federation of Labor-Congress of Industrial Organizations said late Tuesday.
Tea party activists had lauded the Ohio law as a necessary move to trim government spending, while union groups said it unfairly targeted state workers.
"Although the parts of the law that require public workers to contribute to their retirement and health care costs are popular with voters ... the strong opposition to curtailing collective bargaining and seniority rights apparently is what seems to be carrying the day for the law's opponents," said Peter Brown, assistant director of the Quinnipiac University Polling Institute.
But the law's supporters cried foul.
"There is still the opportunity to negotiate contracts (under the law)," said GOP Caucus spokesman John McClelland, ahead of the vote. "But there's a certain level that you should have to contribute."
McClelland pointed to slower population growth and a poor economy as cause for retooling the current system.
"All of this just compounds over time," he said.
CNN's Leigh Remizowski contributed to this report.