Data heterogeneity, characterized by disparities in local data distribution across clients, poses a significant challenge in federated learning. Substantial efforts have been devoted to addressing the heterogeneity in local label distribution. 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. Despite the improved mean accuracy across all classes, we observe that empty classes-referring to categories absent from a client's data distribution-are still not well recognized. This paper introduces FedED, a novel approach in heterogeneous federated learning that integrates both empty-class distillation and logit suppression simultaneously. Specifically, empty-class distillation leverages knowledge distillation during local training on each client to retain essential information related to empty 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 FedED, surpassing previous state-of-the-art methods across diverse datasets with varying degrees of label distribution shift.