UPDATE statement with and without SELECT keyword
Personally, I would re-write this in the following way, to clearly separate the source and the target, instead of using this subquery assignment technique. I am making assumptions on where some of these columns are coming from, of course, because you didn't use aliases, so the references were ambiguous.

DECLARE @sd DATETIME;
SET @sd = DATEADD(DAY, DATEDIFF(DAY, 0, @StartDate_1), 0);

;WITH hrs(DrvrID, ph) AS 
(
  SELECT EmployeeNo, SUM(PyblHrs)
    FROM #tmpDriverTime
    GROUP BY EmployeeNo
)
UPDATE e
  -- "WorkDay2" represents a sum of payable hours? Quaint.
  SET WorkDay2 = COALESCE(hrs.ph, 0)
  FROM hrs
  INNER JOIN dbo.spr_DriverTimeEntry AS e -- schema prefix always, please
  ON hrs.DrvrID = e.DrvrID
  -- please don't convert both sides to a string
  -- use a range, then you can still use an index:
  WHERE e.dtwrkd &gt;= @sd
    AND e.dtwrkd &lt;  DATEADD(DAY, 1, @sd);