Comment 8 for bug 1723117

I believe this is a feature and not a bug. Most people using auto-hide do so because they want to use their full desktop width, which includes putting icons on the left edge of the desktop. So for many/most users of auto-hide the current behaviour is probably best.

Workaround: You also have the option of simply moving your icons to a place where they are never covered.

P.S. The desktop and its icons are rendered by 'nautilus-desktop' from the 'nautilus' source package.