convert your statement like this:
UPDATE prw22001 ;
SET prw22001.stateid = temptable3.constate ;
FROM temptable3, prw22001 ;
WHERE prw22001.empno = temptable3.empno AND temptable3.pssn = prw22001.ssn AND temptable3.empno='5202' AND temptable3.constate <> prw22001.stateid AND prw22001.procyear='2012'