As Grammar Girl points out, using “that” to refer to people is not wrong. The AP Stylebook has a different take, though.
AP says to use “that” for inanimate objects and animals without names (“the chair that sat next to the door”; “the dog that pooped in my yard”), and “who” and “whom” for people and for animals we name.
“That” is a perfectly fine pronoun. Buildings are thats, and bats are thats and even “thats” are that. But, please, for the sake of humanity, let’s make people – including “anyone” – “who” or “whom.”
Here’s one way to think about it, à la Theodor Geisel:
Now imagine a world, one that comes all too soon
When all the Whos have been Thatted, and the Thats turned to Whom.
Poor editors! How dreadful! In Thatville they’ll find
That their usage, in English, has fallen behind.
The That will be singing, “That are you? That, That.”
For The Who will be hiding like a Thing in a hat.
And Abbott and Costello, can you imagine them say
That’s on first? I don’t know. Third base? Now let’s play?
People are whos and sometimes they’re whoms.
A who is a sweeper. A that is a broom.
A that is a hallway, a bug, a cocoon.
A who is whoever walks into a room.
So please stop the Thatting, return to the Whos
Stop rendering inanimate those poor people who
Like Horton, live to hear that mellifluous ring
Of “Who me?” Exactly. Now do the right thing.
(As for the use of “it” instead of “is” in this ad, live by spell-check, die by spell-check.)