What a mystery! You have position and z-index set on both elements...
Don't know how much it helps or hurts, but I did notice that the z-index behaves as expected in FF 14. In Chrome, I'm seeing the same behavior you report. Maybe that can help you track it down.
EDIT:
I found a solution - set the btn z-index to less than 0 (I used -1) and it behaves as expected in Chrome. This has to do with the lowest z-indexed item being absolutely positioned and the highest being relatively positioned. Sometimes those absolutely positioned elements write on top of relatively positioned ones, even though the indexes are set correctly.