The open secret is that layoffs are also used as a gentle way to fire low performers.

By including people in layoffs, you can give them a potentially very generous severance package and you allow them the courtesy of saying they were laid off as opposed to being fired. They get mixed in with all of the good performers who were laid off due to budget cuts.

Putting a lot of restrictions on a company that does layoffs creates a perverse incentive to fire these people explicitly instead of giving them a gentle landing with a layoff. You would see far more people fired instead of "laid off".

At the extreme, you incentivize companies to start firing people to make budget cuts.

So, this is actually a very bad idea. You do not want to start putting handcuffs on companies who do layoffs instead of constant firings.