Never fails, once I post the question to SO, I get some enlightening "aha" moment and figure it out. The solution:
.container {_x000D_
border: 1px solid #DDDDDD;_x000D_
width: 200px;_x000D_
height: 200px;_x000D_
position: relative;_x000D_
}_x000D_
.tag {_x000D_
float: left;_x000D_
position: absolute;_x000D_
left: 0px;_x000D_
top: 0px;_x000D_
z-index: 1000;_x000D_
background-color: #92AD40;_x000D_
padding: 5px;_x000D_
color: #FFFFFF;_x000D_
font-weight: bold;_x000D_
}
_x000D_
<div class="container">_x000D_
<div class="tag">Featured</div>_x000D_
<img src="http://www.placehold.it/200x200">_x000D_
</div>
_x000D_
The key is the container has to be positioned relative and the tag positioned absolute.