KB10774 - How can I force the polygons in my top-most layer to be given visual priority over the labels contained in a lower layer?

By default, the appearance of labels are given view priority over (appear on top of) geometric features, regardless of the z-order number of the layer that contain the labels. This is presentation that most customer want in most situations.

You can, however, turn off this behavior off, either using the project level setting or code (LabelsOnTop=FALSE).