Actually @weaver, His menu does have the z-index:2000 of 3.0.4, BUT there is a rule (below) setting the sub-menu at 90, causing it to be under the text of the Widget area
.is-desktop .menu-primary ul.sub-menu,.is-desktop .menu-primary ul.children{-moz-border-radius:8px;-webkit-border-radius:8px;border-radius:8px;z-index:90;padding-top:6px;padding-bottom:6px;background-color:#EAC6C5;}
.is-desktop .menu-primary ul.mega-menu li{-moz-border-radius:8px;-webkit-border-radius:8px;border-radius:8px;z-index:90;}
that sets the z-index of the Sub menus to 90 causing the problem.
I am not sure if this is a Theme Rule or something that would have been added. But given it is at the top of the CSS, I suspect the theme.
I am not sure when it is generated though
@KarlCraig If it comes from the theme it is a bug that will be fixed and I will give you a temporary CSS rule to fix it