The Merge feature allows you to combine 2 layers (and all the elements in them) into a single layer. It also will preserve the order of each element, so if one element is "on top" of another, it will stay that way after the layers are merged.

To merge 2 layers, they must be adjacent to each other. Select the topmost layer, and then select Edit -> Merge Layer Down. The 2 layers will then be combined into a single layer, retaining the name of the bottom layer.