In this time of shrinking payrolls, the U.S. safety net is being tested. And it is failing, in ways that ultimately could hurt employers.

I’ve previously touched on skimpy unemployment payments in America as well as gaps in U.S. unemployment coverage. Yet another weakness in our web for catching displaced workers centers on notification of plant closures and layoffs.

There is a law designed to give workers 60 days’ warning when their employer shuts down a plant or lays off a large number of employees. Such advance notice can play a crucial role for both workers (who can prepare financially for unemployment and take steps to find new work) and local governments (which can reach out quickly to affected workers with job services).

But the Worker Adjustment and Retraining Notification (WARN) Act, passed in 1988, has proved to be fundamentally flawed and increasingly unhelpful to displaced employees.

In 1993, a federal study on WARN found that about half of the employers with 100 or more workers that closed or had a layoff in 1990 were not required to provide notice.

Ten years later, a similar federal study found that about one-quarter of the 8,350 plant closures and mass layoffs in 2001 appeared to be subject to WARN’s advance-notice requirements.

Not only does the law seem to be protecting fewer workers over time, but employers appear to violate the law frequently. The 2003 study found that employers provided notice for only about one-third of layoffs and closures that appeared subject to WARN requirements.

Among the explanations for these alarming statistics is employer confusion over the law.

Loopholes also play a key role. One provision in particular gives many employers a pass on WARN. Firms are exempt from WARN’s requirements if they lay off 50 to 499 full-time workers at a single site and the number laid off is less than one-third of the full-time workforce at that site.

That “one-third” rule may have made more sense during dramatic manufacturing job cuts of earlier decades. But in contemporary corporate restructurings, where 10 to 15 percent of the workforce often gets lopped off, the rule amounts to a major barrier to giving workers and governments a heads up.

It also should be said that employers in many instances are giving advance notice of layoffs. In fact, the 2003 federal study found employers provided 5,349 WARN notices, but there were only 1,974 plant closure and mass layoffs that appeared to meet the WARN criteria.

That discrepancy may result from the way the study relies on unemployment insurance claims to determine the number of mass layoff events, yet there’s evidence that fewer than half of unemployed people apply for unemployment insurance benefits.

As a result, it may be the case that employers are complying with the law more like 80 percent of the time. Still, a 20 percent rate of breaking the law on notification is a problem.

Last year, the Toledo Blade newspaper examined the WARN Act and concluded the law “is so full of loopholes and flaws that employers repeatedly skirt it with little or no penalty.” The newspaper also said that since WARN was passed, “employers have laid off tens of thousands of workers nationwide with little or no notice.”

There are plenty of ideas for fixing WARN. A bill to lengthen the notification period, broaden the number of businesses subject to WARN requirements and authorize the Department of Labor to enforce the law was introduced last year by Sens. Sherrod Brown, D-Ohio; Hillary Rodham Clinton, D-New York; and Barack Obama, D-Illinois, the presumptive Democratic presidential candidate.

Legitimate employer concerns surround proposed WARN reforms. Lowering the layoff threshold to as few as 25 employees could cause hardship to struggling small businesses.

And we ought to put at least as much if not more emphasis on helping workers rebound from job loss—steps such as better unemployment insurance benefits and retraining programs.

But ultimately, a sound safety net requires some measure of advance notice for major job cuts. Without that, worker transition to new employment—possibly with higher skills—is less than optimal. The level of economic insecurity felt by workers is heightened—which translates into lower consumer confidence. And there’s an effect on the already tattered fabric of trust between workers and employers.

It seems that fabric tore quite literally for Joe Aguiar last year.

A maintenance worker at a fabric company in Massachusetts, Aguiar was given just a day’s notice that his company was shutting its doors. Aguiar, who testified at a congressional hearing in May, said that after a 27-year career at Quaker Fabric he now works a few hours a week cleaning out factory buildings where he used to have a regular job.

“Employees should not be treated like the trash that I take from the empty Quaker factories and put out on the street,” he said in his written testimony.

If employees can be treated like garbage when they lose a job, it may be hard for them to develop the kind of loyalty and engagement that today’s employers seek the next time around.