Whole screen fades slightly when I add a layer... why?

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Junior Adobe Premiere user here. Using Premiere Pro 2020 on Windows 10, I am interviewing a person on Layer 1. I added a picture in the upper right corner of the screen on Layer 2. I just imported the image and dragged it to the timeline so it is on a new layer, then scaled it and repositioned it using the Effects Control panel. (I have a feeling this is my issue) It looks perfect in Premiere, but when I export to MP4, for the duration of the clip on Layer2, the whole of Layer1 fades slightly.

Export settings: H.264, Match Source Bitrate, HW encoding, VBR, 1 pass, Target Bitrate: 10Mbps

Any ideas on what causes this and how to not fade the whole bottom layer?

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This was solved Ann Bens on the Adobe forums (https://community.adobe.com/t5/premiere-pro/layer-2-is-shading-layer-1-why/m-p/12061418#M348445). I disabled hardware encoding and this fixed my issue. This is of course just a band-aid as it does not address the real underlying issue but it does solve the problem.