MAYOR BARRY has now entered the struggle to redesign the city's extravagant worker's compensation law. On Tuesday, when the city council is scheduled again to take up -- and possibly vote on -- proposals for a new law, the mayor's independent voice will be in the key to any resolution. Mr. Barry's proposals bridge two bills, one with some labor union support and the other backed by business. The two sides are in agreement on the basic rate structure for the new law as well as on a new limit on maximum payments. Everyone also (obviously) agrees that if a worker is injured on the job, he deserves some compensation for both the injury he sustains and the pay he loses during the time needed to recover. But on several major issues having to do with the guidelines for the program, business and labor differ. The mayor has proposed compromises.

His proposals include a 6 percent ceiling on increases in benefits due to inflation, splitting the difference between labor's 9 percent and business's 3 percent. The mayor also wants to choose the panel of doctors who examine workers, and he supports a business's right to challenge an employee when there is evidence to believe that the worker's injury was not work related. Generally, the mayor's proposals are reasonable. They should be adopted with one major exception. Doctors who examine injured workers should not be chosen by politicians. It is an invitation to corruption. Workers should be examined by doctors who are acceptable to both unions and businessmen.

The council's job does not end with the adoption of a new worker's compensation law. The D.C. government should take over the program from the U.S. Labor Department. The Labor Department currently administers the program as an afterthought, in a throwback to the days when the federal government had much responsibility for local affairs. Despite warnings that the District will have to pay more for administration of the program if it takes it over than is now paid the Labor Department for doing the job, the District must take on that responsibility. The handling of worker's compensation cases is too important to the local economy to be left to a huge bureaucracy that has other things to do.

The Greater Washington Central Labor Council opposes changing the worker's compensation law. The council argues that business has yet to show that the current law is being abused, and contends that business should question insurance companies as to why rates are too high.It is not clear that insurance companies are faultless in the problems surrounding worker's compensation in the District. But it is clear that a major reason for the high rates charged businesses here is the exorbitant benefits -- second highest in the nation -- available to workers under the current law.

The important fact is that a new and less severe rate structure would benefit workers as much as businessmen. The city needs to attract more businesses, which in turn will hire workers. Under the current law, insurance rates, which have risen 400 percent in the last six years, are far out of line with rates in Virginia and Maryland. This situation benefits no one. The council should put an end to it on Tuesday.