Label skews, characterized by disparities in local label distribution across clients, pose a significant challenge in federated learning. As minority classes suffer from worse accuracy due to overfitting on local imbalanced data, prior methods often incorporate class-balanced learning techniques during local training. Although these methods improve the mean accuracy across all classes, we observe that vacant classes-referring to categories absent from a client's data distribution-remain poorly recognized. Besides, there is still a gap in the accuracy of local models on minority classes compared to the global model. This paper introduces FedVLS, a novel approach to label-skewed federated learning that integrates both vacant-class distillation and logit suppression simultaneously. Specifically, vacant-class distillation leverages knowledge distillation during local training on each client to retain essential information related to vacant classes from the global model. Moreover, logit suppression directly penalizes network logits for non-label classes, effectively addressing misclassifications in minority classes that may be biased toward majority classes. Extensive experiments validate the efficacy of FedVLS, demonstrating superior performance compared to previous state-of-the-art (SOTA) methods across diverse datasets with varying degrees of label skews. Our code is available at https://github.com/krumpguo/FedVLS.

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