CASE might help you out:
SELECT t.first_name,
t.last_name,
t.employid,
t.status
FROM employeetable t
WHERE t.status = (CASE WHEN status_flag = STATUS_ACTIVE THEN 'A'
WHEN status_flag = STATUS_INACTIVE THEN 'T'
ELSE null END)
AND t.business_unit = (CASE WHEN source_flag = SOURCE_FUNCTION THEN 'production'
WHEN source_flag = SOURCE_USER THEN 'users'
ELSE null END)
AND t.first_name LIKE firstname
AND t.last_name LIKE lastname
AND t.employid LIKE employeeid;
The CASE statement evaluates multiple conditions to produce a single value. So, in the first usage, I check the value of status_flag, returning 'A', 'T' or null depending on what it's value is, and compare that to t.status. I do the same for the business_unit column with a second CASE statement.