One peeve I’ve seen pop up a couple of times recently is the prohibition on using “that” when referring to people, as in “The scientists that worked on the project toiled in anonymity” instead of “The scientists who worked on the project toiled in anonymity.” Some people think — and are quick to point out — that “who” is the only proper pronoun for human antecedents; centuries of written English say otherwise, as do most reputable usage guides.
In this kind of construction, “who” and “that” are relative pronouns introducing an essential, or restrictive, clause. Essential clauses are just that — essential to the meaning of the sentence. In other words, if you take them out, the meaning of the sentence changes.
“That” can refer to any sort of antecedent, whether it’s a person or a thing. It did for Chaucer, it did for Shakespeare, it did even in the King James Bible (the first instance is in Genesis: “And the sons of Noah, that went forth of the ark, were Shem, and Ham, and Japheth: and Ham is the father of Canaan.”). “Who” has arisen as a more specific form for people — and pets and zoo animals — and its use is apparently broadening, as it is occasionally seen referring to businesses.
Is there a preference for “who” when the antecedent is human? Absolutely. It’s even part of some style guides. But is “that” grammatically wrong? Absolutely not.